The Carvana Co (NYSE: CVNA) stock price was trading up 3.49%, adding to yesterday’s 40.2% rally after the company unveiled a new plan supported by holders of its unsecured senior notes to reduce its overall debt and slash its interest payments over the next two years.
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The transaction support agreement garnered the backing of 90% of the senior unsecured noteholders. It will eliminate over 83% of Carvana’s 2025 and 2027 unsecured note maturities and lower the required cash interest expense by over $430 million annually for the next two years.
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The agreement between Carvana and its creditors will reduce the company’s debt burden by over $1.2 billion. Over 90% of noteholders supported the deal, representing debt worth over $5.2 billion.
Carvana also released a positive earnings report for the second quarter, where its total gross profit per unit (GPU) was $6,520, an increase of 94% compared to Q2 2022, exceeding the Company’s previous best quarter by 27%.
Total Non-GAAP GPU was $7,030, marking an increase of 91% compared to Q2 2022 and exceeding the Company’s previous best quarter by 36%. The company’s net loss margin was (3.5%), an improvement of 7.8% compared to Q2 2022.
Mark Jenkins, Carvana’s Chief Financial Officer, said: “The strong performance of our business in 2023 presented an opportunity for an impactful and win-win transaction for Carvana and its senior unsecured noteholders. This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth.”
John Zito, Apollo Deputy CIO of Credit, said: “Apollo is pleased to support this debt exchange agreement, which stands to significantly strengthen Carvana's financial position while providing creditors with new first lien debt. Working with Carvana, PIMCO, Ares and the ad hoc group of noteholders, we believe this agreement demonstrates the types of win-win outcomes that companies can achieve with constructive and engaged financing partners. We continue to have strong conviction in Carvana's strategy and Ernie Garcia's vision to revolutionize the way consumers buy, sell, and finance their vehicles.”
*This is not investment advice.
Carvana stock price.
The Carvana stock price was trading up 3.49% at $57.75, adding to yesterday’s 40.2% rally.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
