Carvana has taken the ‘poison pill’ and sold $4 billion in auto loans

The Carvana used car “shopping machine” car show on December 09, 2022 in Miami, Florida.

Joe Raedle | Getty Images

caravan used a “poison billion” to limit shareholders from increasing their stake and reached an agreement to sell $4 billion in loans car, the struggling used car dealer said on Tuesday.

The company’s shares gained 6.5% to $7.47 in the afternoon.

Ally Bank and Ally Financial will buy the loans, the company said, giving Carvana a new source of funding as it tries to restructure its operations.

Carvana said the “toxic bill” would help protect its “valuable” US federal net operating loss (NOLs) that could be available to offset its future taxable income.

The company’s ability to use NOLs will be severely limited if its shareholders increase 5%, Carvana said.

Companies with large NOLs often use drugs to cut their tax bills. Herbs are also used to prevent pregnancy.

“This type of action suggests a more defensive position by the CVNA board of directors, and may prevent any future organization from gaining control,” the team said. study at Raymond James in a book.

Carvana, which some analysts say is in financial trouble due to rapid expansion during the pandemic, raised 4.9% for the rights plan.

The rights plan went into effect on Monday and is scheduled to run until January 15, 2026.

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