Item 1.01
|
Entry into a Material Definitive Agreement.
|
Issuance of Senior Notes due 2025 and 2028
On October 2, 2020 (the “Closing Date”), Carvana Co. (the “Issuer”) issued $500,000,000 of its 5.625% Senior Notes due 2025 (the “2025 Notes”) and $600,000,000 of its 5.875% Senior Notes due 2028 (the “2028 Notes” and together with the 2025 Notes, the “Notes”). The offering and sale of the Notes were made only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or, outside the United States, to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act. The Notes were newly issued under separate indentures (the “Indentures”), each dated as of the Closing Date, entered into by and among the Issuer, each of the guarantors party thereto and U.S. Bank National Association, as trustee (the “Trustee”).
Interest and Maturity
The 2025 Notes will accrue interest at a rate of 5.625% per annum, payable in cash semi-annually, in arrears, on April 1 and October 1 of each year, beginning on April 1, 2021. The 2025 Notes will mature on October 1, 2025, unless earlier repurchased or redeemed.
The 2028 Notes will accrue interest at a rate of 5.875% per annum, payable in cash semi-annually, in arrears, on April 1 and October 1 of each year, beginning on April 1, 2021. The 2028 Notes will mature on October 1, 2028, unless earlier repurchased or redeemed.
Guarantees, Security and Ranking
The Notes are guaranteed on a senior unsecured basis by the Issuer’s domestic restricted subsidiaries (other than subsidiaries formed for inventory, receivables, or securitization facilities and immaterial subsidiaries) (the “Guarantors”). The Notes are the Issuer’s and the Guarantors’ senior unsecured obligations. The Notes and the guarantees rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior indebtedness. The Notes and the guarantees rank effectively junior to all of the Issuer’s and the Guarantors’ secured obligations to the extent of the value of the collateral securing such obligations. The Notes and the guarantees will rank senior in right of payment to any of the Issuer’s and the Guarantors’ future indebtedness that is expressly subordinated to the Notes or guarantees. The Notes and the guarantees would rank structurally junior to any indebtedness and other liabilities of the Issuer’s subsidiaries that are not Guarantors of the Notes.
Redemption
The Issuer may redeem some or all of the 2025 Notes and the 2028 Notes on or after October 1, 2022 and October 1, 2023, respectively, at the redemption prices set forth in the applicable Indenture plus accrued and unpaid interest, if any, to the date of redemption.
Prior to October 1, 2022, the Issuer may redeem up to 35.0% of the aggregate principal amount of the 2025 Notes at a redemption price equal to 105.625%, together with accrued and unpaid interest, if any, to, but not including, the date of redemption, with the net cash proceeds of certain equity offerings.
Prior to October 1, 2023, the Issuer may redeem up to 35.0% of the aggregate principal amount of the 2028 Notes at a redemption price equal to 105.875%, together with accrued and unpaid interest, if any, to, but not including, the date of redemption, with the net cash proceeds of certain equity offerings.
2