Carvana's stock soared over 30% following a monumental debt reduction deal.
The online used-car retailer negotiated a $1.2 billion reduction in outstanding debt through a strategic agreement with noteholders.
This eliminates more than 80% of its 2025 and 2027 "unsecured note maturities," resulting in a $430 million annual reduction in cash interest expenses for the next two years.
Despite periodic losses due to declining used car prices, Carvana's outstanding business performance created an opportunity for the transaction.
CFO Mark Jenkins stated that the deal strengthens financial flexibility and aligns with their growth strategy.
Carvana disrupted the industry with its seamless online car shopping and vending machines.
Alongside the debt reduction, the company's quarterly earnings surpassed revenue expectations, but the number of cars sold fell slightly below forecasts.
Carvana's shares have seen an astonishing 1,000% increase in value over the year.