Carvana shares surged Wednesday after the used-car retailer said that it had reached a bond-swap deal to reduce its debt by $1.2 billion and launched plans to issue stock through an at-the-market offering, WSJ Pro Bankruptcy reported. The company said that it had reached an agreement with a group of investors including Apollo Global Management, Pimco and Ares, who collectively own $5.2 billion of its outstanding unsecured bonds, to swap their holdings into new secured bonds that have the option to pay interest in-kind, meaning that it can be tacked onto the principal balance rather than paid in cash. Carvana also said that it has entered a distribution agreement with Citigroup and Moelis to sell up to the greater of either $1 billion or 35 million shares through the at-the-market program, filing a new shelf registration statement to the SEC. The Arizona-based company also reported a narrower second-quarter loss than analysts had expected early Wednesday. The stock jump, if sustained through the regular trading session, would extend a rally that began in May. Carvana has struggled as rising interest rates and high inflation have curbed demand for big-ticket purchases. Falling prices for used cars have weighed on the value of its inventory. In early June, though, the company said it expected cost-cutting measures to boost profitability.
