Item 1.01 Entry into a Material Definitive Agreement.
Issuance of Senior Notes due
On March 29, 2021 (the “Closing Date”), Carvana Co. (the
“Issuer”) issued $600,000,000 of its 5.500% Senior Notes due 2027
(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 an indenture (the
“Indenture”), 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 Notes will accrue interest at a rate of 5.500% per annum,
payable in cash semi-annually, in arrears, on April 15 and
October 15 of each year, beginning on October 15, 2021.
The Notes will mature on April 15, 2027, unless earlier
repurchased or redeemed.
Guarantees, Security and
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.
The Issuer may redeem some or all of the Notes on or after
April 15, 2024 at the redemption prices set forth in the
applicable Indenture plus accrued and unpaid interest, if any, to
the date of redemption.
Prior to April 15, 2024, the Issuer may redeem up to 35.0% of
the aggregate principal amount of the Notes at a redemption price
equal to 105.5%, 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.
In addition, the Issuer may, at its option, redeem some or all of
the Notes prior to April 15, 2024 by paying a make-whole
premium, plus accrued and unpaid interest, if any, to, but not
including, the date of redemption. If the Issuer experiences
certain change of control events, it will make an offer to purchase
all of the Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the repurchase date.
The Indenture contains restrictive covenants that limit the ability
of the Issuer and the Issuer’s restricted subsidiaries to, among
other things: incur additional debt or issue preferred stock;
create liens; create restrictions on the Issuer’s subsidiaries’
ability to make payments to the Issuer; pay dividends and make
other distributions in respect of the Issuer’s and its restricted
subsidiaries’ capital stock; redeem or repurchase the Issuer’s
capital stock or prepay subordinated indebtedness; make certain
investments or certain other restricted payments; guarantee
indebtedness; designate unrestricted subsidiaries; sell certain
kinds of assets; enter into certain types of transactions with
affiliates; and effect mergers or consolidations. These covenants
are subject to important exceptions and qualifications set forth in
the Indenture. If the Notes are assigned an investment grade rating
from any two of Fitch Ratings, Inc., Standard & Poor’s
Rating Services and Moody’s Investors Service, Inc. and no default
has occurred and is continuing, certain of these covenants will be
suspended with respect to such Notes.