Carvana was worth more than $4 billion at the end of September, said Sharon Zackfia, a consumer stock research analyst at William Blair who oversees Carvana and smaller online competitors Bloom and Shift Technologies. He held financing, unsecured real estate, and other assets.
This is “certainly sufficient to sustain operations for the foreseeable future” and “it is likely that an imminent Chapter 11 restructuring will not be necessary,” Zackfia said. car news on mail.
The bigger question, Zackfir said, is how long the weak used-car sales environment will last and how long it will take before the softness in used-car retail prices stabilizes to levels that bring back shoppers who have been hesitant at recent highs. It means that it takes time.
Both Zackfia and Imbro say Carvana has enough liquidity to survive through 2023. That real potential could be undermined by rising interest rates and growing consumer vulnerability, she said.
Basham said the three events could soon occur separately or simultaneously in Calvana. The retailer could go through a debt restructuring, sell assets to raise cash, or make a capital injection in the form of an initial public offering led by Garcia and his father Ernest Garcia. II.
Any of these scenarios could occur in the coming months, Basham said. He based that timeline in part on a Bloomberg report earlier this month that said some of Calvana’s biggest creditors would act together for a minimum of three months in negotiations with the company in the event of a debt restructuring. It indicates that you have signed a binding contract.
Creditors have no power to force anything on Carvana as long as it continues to pay interest on its debt and maintain cash flow, Basham said.
He also estimates that Carvana has enough cash reserves to pay interest by the end of 2023, but no further payments are possible if the liquidity situation isn’t addressed by then.
The largest portion of Carvana’s long-term debt — $3.3 billion at an interest rate of 10.25% — will mature in May 2030.