Carvana Jumps on Pact to Restructure Debt, Strong Q2 Results

Used-car retailer Carvana (CVNA:US) saw its shares surge as much as 37% on Wednesday after the company announced an agreement with existing noteholders to significantly lower its total outstanding debt by more than $1.2 billion.

Under the terms of the agreement, Carvana has eliminated over 83% of its 2025 and 2027 unsecured note maturities and lowered required cash interest expense by over $430 million per year for the next two years.

“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. 

“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.”

The company also announced Q2 results, including an increase in annual profits. Carvana said it sold 76,530 units to generate revenue of $2.968 billion, marking a YoY decrease of 35% and 24%, respectively. 

Carvana expects to achieve positive Adjusted EBITDA for the second consecutive quarter in Q3.

In addition to the results and agreement with noteholders, Carvana also said it intends to sell 35 million shares to generate proceedings of at least $350 million. The company has opted to boost its liquidity after a 900%+ YTD rally.

Congress members Ro Khanna and Josh Gottheimer were both trading CVNA shares last year.