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A glass tower of Carvana is lit up in Oak Brook, Illinois, February 23, 2022.
Armando L. Sanchez | Tribune News Service | Getty Images
Mobile home The company reached an agreement with its owners to reduce the total debt owed by the used car retailer by more than $1.2 billion said Wed.
Carvana said the agreement would eliminate more than 83% of Carvana’s 2025 and 2027 unsecured bond maturities and reduce required cash interest expense by more than $430 million annually over the next two years.
Shares of the company were up 30% in pre-market trading Wednesday, after falling nearly 7% prior to the announcement.
“This transaction significantly increases our financial resilience by reducing our total debt, extending maturities, and reducing cash interest expense in the near term as we continue to execute on our plan to turn a significant profit and return to growth,” Carvana Chief Financial Officer Mark Jenkins said in a statement. .
Carvana said its restructuring agreement covered approximately $5.2 billion of large unsecured notes and included Apollo Global Management, its largest bondholder. Under the terms of the deal, the creditors will receive new secured bonds.
The agreement was announced jointly with the company second quarter earnings.
Carvana’s debt prior to the transaction was about $8.5 billion, including $5.7 billion, or 74.5%, in unsecured bonds.
Carvana has been working on such a deal for more than a year as the stock plunged due to a heavy debt load and improper management during the coronavirus pandemic.
This is a developing story. Please check back for additional updates.
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