Carvana stock surges 40% after it reaches a massive debt reduction deal
New York CNN —
Shares of Carvana, the online used-car seller known for its tall, glass car-vending machines, closed the trading day on Wednesday up by more than 40% after the company reached a debt restructuring agreement.
The Phoenix-based company will reduce its outstanding debt by more than $1.2 billion, according to a release. Specifically, the agreement made with noteholders means it’s eliminating more than 80% of Carvana’s 2025 and 2027 “unsecured note maturities and lower required cash interest expense by over $430 million per year for the next two years,” it said.
Carvana has been struggling financially in recent months because of declining used car prices. A relatively new player in the used car field, it has lost money most quarters since it went public in 2017 as it aimed for sales growth rather than short-term profitability.
“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,” said Mark Jenkins, Carvana’s chief financial officer, in a statement.
“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,” he said.
Carvana launched 10 years ago with a plan to disrupt the used car market, offering both online car shopping and trade-ins as well as distinctive car vending machines.
The company also announced quarterly earnings, with revenue beating expectations. However, it sold fewer cars than forecast. Carvana (CVNA) shares are up now a whopping 1,000% for the year.
Source: CNN
