Senior Unsecured Regular Bond/Debenture, Confirmed at Caa2 (LGD5) Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5) Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Corporate Family Rating, Downgraded to Caa1 from B3 The stable outlook recognizes Carvana's lack of near dated debt maturities and its historic ability to access the public debt and equity markets to support its cash deficits. Carvana is acquiring the assets of ADESA Inc which includes 56 properties on which it will build its own Inspection and Refurbishment Centers (IRC) as well as leverage its existing sites and logistics.
#CARVANA DELIVERY STATUS CONFIRMED FREE#
The downgrade also reflects governance considerations particularly Carvana's financial policies which support its external floor plan facilities going current despite the expectation for significant negative free cash flow as well as its decision to finance the ADESA acquisition partially with debt despite its very high leverage. The downgrade reflects Carvana's very weak credit metrics, persistent lack of profitability and negative free cash flow generation which we expect to continue as the company embarks on building out, adequately staffing and ramping up acquired sites and existing locations to where they are cash flow positive on a sustained basis. Ratings and outlook are subject to the receipt and review of final documentation. Proceeds from the proposed $2.275 billion of senior unsecured notes along with $1.0 billion of preferred equity and $1.0 billion of common equity will be used to fund the $2.2 billion acquisition of ADESA Inc, as well as for general corporate purposes that include capital expenditures and repaying outstanding floor plan borrowings. This concludes Moody's review initiated on February 28, 2022. Carvana's speculative grade liquidity rating is SGL-4. In addition, Moody's confirmed Carvana's senior unsecured notes at Caa2 and assigned a Caa2 to the proposed $2.275 billion proposed senior unsecured notes. New York, Ap- Moody's Investors Service ("Moody's") today downgraded Carvana Co.'s ("Carvana"), corporate family rating (CFR) to Caa1 from B3 and probability of default rating (PDR) to Caa1-PD from B3-PD.
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