Miserable debt swap
Carvana and a group of creditors, including its largest, Apollo Global, Ares and Pacific Investment, announced the swap in July. The deal was expected to reduce debt by about $1.2 billion and save $430 million in interest expense annually.
Carvana has also offered to buy back any of the bonds due in 2025 that are not included in the debt swap, and the cash offer is expected to be settled on Friday, according to the statement. About 80% of the 2025 bondholders participated in the deal, while more than about 95% of the other three eligible bondholders offered their bonds.
Used car prices are finally dropping
Meanwhile, ratings agency Standard & Poor’s Global Ratings downgraded Carvana on Friday, calling the deal a “miserable” swap equal to default due to the discount accepted by bondholders and the extension of maturities. The auto retailer made the swap, due to its dwindling liquidity and low levels of cash the company could generate, Standard & Poor’s analysts wrote in a report.
2023-09-03 11:21:28
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