Carvana Plans Turnaround With Strategic Restructuring, Stock Rebound And Debt Overhaul: Report

Carvana Co. CVNA is reportedly gearing up for a restructuring.

Over the past 18 months, Carvana has undertaken a significant restructuring, focusing on operations and debt reduction amidst bankruptcy concerns, reported CNBC.

These strategic moves are crucial for the company and its major shareholders, particularly CEO Ernie Garcia III and his father, Ernie Garcia II, who collectively control 88% of Carvana through special voting shares.

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The ongoing efforts have proven successful, leading to a notable improvement in Carvana’s stock performance. 

While the stock has rebounded from less than $5 per share to over $55 at the start of 2024, it remains significantly below its peak of over $370 per share reached during the 2021 COVID-19 pandemic, CNBC noted.

“We have every intention of continuing to make progress and don’t expect to return to a situation like that,” the company CEO told CNBC in an interview. “I think the pressure of the last two years caused us to really focus on the most important things.”

By the conclusion of the third quarter, Carvana boasted $544 million in cash and cash equivalents, witnessing a $228 million increase from the previous year’s end. The company’s overall liquidity, encompassing secured debt capacity and other elements, amounted to $3.18 billion.

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Carvana’s fresh notes are set to mature in 2028, while the existing notes, with interest rates ranging from just under 5% to over 10%, have maturity dates spanning from 2025 to 2030, CNBC added. 

Collectively, the old and new notes constitute approximately 78% of Carvana’s nearly $6 billion total debt.

The company is scheduled to report its fourth quarter and fiscal year 2023 financial results after the market closes on Thursday, Feb. 22.

Price Action: CVNA shares closed higher by 2.16% to $43.45 on Friday. Shares fell 0.23% to $43.35 after hours. 

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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