On June 18, 2021, the Company issued $625.0 million aggregate principal amount of 0.75% unsecured Convertible Senior Notes due 2026 (the “Notes”), including $75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the overallotment option granted to the initial purchasers. The Notes were issued pursuant to an indenture (the “Indenture”), between the Company and U.S. Bank National Association, as trustee.

The Notes bear interest at a rate of 0.75% per annum, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2022. The Notes will mature on July 1, 2026, subject to earlier repurchase, redemption or conversion. The total net proceeds from the offering, after deducting commissions paid to the initial purchasers and debt issuance costs paid to third-parties, were approximately $608.9 million.

Each $1,000 principal amount of the Notes will initially be convertible into 0.2232 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $4,480.29 per share, subject to adjustment upon the occurrence of specified events. The Notes are convertible, at the option of the noteholders, on or after April 1, 2026. Prior to April 1, 2026, the Notes are convertible only under the following circumstances:

The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The Company may not redeem the Notes prior to July 6, 2024. On or after July 6, 2024, the Company may redeem all or any portion of the Notes for cash equal to 100% of the principal amount of the Notes being redeemed plus any accrued and unpaid interest if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

If the Company undergoes a fundamental change (as defined in the Indenture), subject to certain conditions, holders of the Notes may require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate by pre-defined amounts for a holder who elects to convert their Notes in connection with such a corporate event. During the three and six months ended June 30, 2024, the conditions allowing holders of the Notes to convert were not met.

During the three and six months ended June 30, 2023, the Company repurchased $18.2 million and $32.8 million in aggregate principal amount of the Notes, net of deferred issuance costs, for $7.3 million and $13.2 million, respectively, in open-market transactions. The Company recognized a gain on extinguishment of debt of $10.9 and $19.6 million for the three and six months ended June 30, 2023, respectively.

The Company accounts for the Notes as a single liability-classified instrument measured at amortized cost. As of June 30, 2024, the unamortized debt discount and debt issuance costs was $2.9 million and the net carrying value was $287.6 million. As of December 31, 2023, the unamortized debt discount and debt issuance costs was $3.7 million and the net carrying value was $286.8 million.

The Notes were issued at par value and fees associated with the issuance of these Notes are amortized to interest expense using the effective interest method over the contractual term of the Notes. The interest expense was $0.9 million and $1.1 million for the three months ended June 30, 2024 and 2023, respectively, and $1.8 million and $2.2 million for the six months ended June 30, 2024 and 2023, respectively. The effective interest rate of the Notes is 1.3%.

The securitization debt was issued under UACC's securitization program. The Company elected to account for the 2022-2 and 2023-1 securitization debt under the fair value option using the measurement alternative. Fair value adjustments are recorded in "Realized and unrealized losses, net of recoveries" in the condensed consolidated statements of operations. Refer to Note 14 – Financial Instruments and Fair Value Measurements. The 2024-1 securitization debt is measured at amortized cost. For the 2022-2, 2023-1 and 2024-1 securitization transactions, the Company consolidated the VIEs and accounted for these transactions as secured borrowings. Refer to Note 4 – Variable Interest Entities and Securitizations for further discussion.

Upon the issuance of the securitization debt for the 2023-1 and 2024-1 securitization transactions, UACC retained the residual interests. UACC also retains the servicing rights for all finance receivables that were securitized; therefore, it

is responsible for the administration and collection of the amounts owed under the contracts. In the first quarter of 2023, UACC waived its servicing fees related to the 2022-2 securitization and subsequently consolidated the 2022-2 trust. The securitization agreements also require certain funds to be held in restricted cash accounts to provide additional collateral for the borrowings or to be applied to make payments on the securitization debt. Restricted cash under the various agreements totaled approximately $34.4 million and $28.5 million as of June 30, 2024 and December 31, 2023, respectively.

Wholly owned bankruptcy remote subsidiaries of UACC were formed to facilitate the above asset-backed financing transactions. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. None of the assets of these subsidiaries are available to pay other creditors of the Company or its affiliates.

The securitization debt issued is included in "Long-term debt" on the condensed consolidated balance sheet. The securitization debt of consolidated VIEs consisted of the following (in thousands):


As of June 30, 2024
Series	Final Scheduled Payment Date	Initial Principal		Contractual Interest Rate		Outstanding Principal		Fair Value
United Auto Credit 2022-2-B	December 10, 2025	$	30,324	5.41	%	$	1,617	$	1,616
United Auto Credit 2022-2-C	May 10, 2027		26,533	5.81	%		26,533		26,499
United Auto Credit 2022-2-D	January 10, 2028		32,889	6.84	%		32,889		32,106
United Auto Credit 2022-2-E	April 10, 2029		33,440	10.00	%		28,440		20,864
United Auto Credit 2023-1-B	July 10, 2028		51,157	5.91	%		25,699		25,679
United Auto Credit 2023-1-C	July 10, 2028		33,326	6.28	%		33,326		33,253
United Auto Credit 2023-1-D	July 10, 2028		35,653	8.00	%		35,653		36,124
United Auto Credit 2023-1-E	September 10, 2029		23,256	10.98	%		23,256		23,613
Total rated notes at fair value		$	266,578			$	207,413	$	199,754

United Auto Credit 2024-1-A	August 10, 2026	$	132,340	6.17	%	$	107,745
United Auto Credit 2024-1-B	June 10, 2027		42,770	6.57	%		42,770
United Auto Credit 2024-1-C	October 10, 2029		35,190	7.06	%		35,190
United Auto Credit 2024-1-D	November 12, 2029		52,160	8.30	%		52,160
United Auto Credit 2024-1-E	November 12, 2030		37,540	10.45	%		37,540
Total rated notes at amortized cost		$	300,000			$	275,405
Unamortized debt issuance costs						$	3,043
Net carrying value						$	272,362


As of December 31, 2023
Series	Final Scheduled Payment Date	Initial Principal		Contractual Interest Rate		Outstanding Principal		Net Carrying Value
United Auto Credit 2021-1-D	June 10, 2026	$	29,380	1.14	%	$	3,246	$	3,235
United Auto Credit 2021-1-E	June 10, 2026		20,800	2.58	%		20,800		20,540
United Auto Credit 2021-1-F	September 10, 2027		13,910	4.30	%		13,910		13,644
United Auto Credit 2022-2-B	December 10, 2025		30,324	5.41	%		28,786		28,745
United Auto Credit 2022-2-C	May 10, 2027		26,533	5.81	%		26,533		26,331
United Auto Credit 2022-2-D	January 10, 2028		32,889	6.84	%		32,889		32,642
United Auto Credit 2022-2-E	April 10, 2029		33,440	10.00	%		33,440		29,691
United Auto Credit 2023-1-A	July 10, 2025		118,598	5.57	%		15,089		15,083
United Auto Credit 2023-1-B	July 10, 2028		51,157	5.91	%		51,157		51,019
United Auto Credit 2023-1-C	July 10, 2028		33,326	6.28	%		33,326		33,199
United Auto Credit 2023-1-D	July 10, 2028		35,653	8.00	%		35,653		36,152
United Auto Credit 2023-1-E	September 10, 2029		23,256	10.98	%		23,256		23,814
Total rated notes		$	449,266			$	318,085	$	314,095

The final scheduled payment date represents legal maturity of the remaining balance sheet securitization debt. Securitization debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $113.2 million in 2024, $161.4 million in 2025, $111.5 million in 2026, $59.7 million in 2027 and $37.0 million in 2028.

In February 2024, UACC exercised its option to repurchase the 2021-1 securitization debt for a total redemption price of $35.6 million.

The aggregate principal balance and the fair value of finance receivables pledged to the securitization debt consists of the following (in thousands):


	As of June 30,				As of December 31,
	2024				2023
	Aggregate Principal Balance		Net Carrying Value		Aggregate Principal Balance		Net Carrying Value
United Auto Credit 2021-1	$	—	$	—	$	38,951	$	35,790
United Auto Credit 2022-2		93,209		80,388		125,072		111,379
United Auto Credit 2023-1		149,351		126,308		197,586		169,829
United Auto Credit 2024-1		351,133		316,121		—		—
Total finance receivables of CFEs	$	593,693	$	522,817	$	361,609	$	316,998

On May 3, 2023, UACC entered into a Risk Retention Financing Facility enabling it to finance asset-backed securities issued in its securitization transactions and held by UACC pursuant to applicable Risk Retention Rules. Under this facility, UACC sells such retained interests and agrees to repurchase them on a future date. In its initial transaction under this facility, UACC pledged $24.5 million of its retained beneficial interests as collateral, and received proceeds of $24.1 million, with expected repurchase dates ranging from March 2025 to September 2029. Following the completion of the 2024-1 securitization transaction, the Company pledged an additional $15.8 million of its retained beneficial interests as collateral under the Risk Retention Financing Facility, and received proceeds of $15.6 million, with expected repurchase dates ranging from August 2026 to November 2030 at the initial closing date. The securitization trusts will distribute payments related to UACC's pledged beneficial interests in securitizations directly to the lender, which will

reduce the beneficial interests in securitizations and the related debt balance. Pledged collateral levels are monitored and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral, UACC may be required to transfer cash or additional securities as pledged under this facility. At the termination of this agreement, UACC is obligated to return the amounts borrowed.

The outstanding balance of this facility, net of unamortized debt issuance costs, was $24.8 million and $15.4 million as of June 30, 2024 and December 31, 2023, respectively, and is included in "Long-term debt" on the condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the fair value of the collateral pledged under this facility was $25.0 million and $15.8 million, respectively.

On July 31, 2003, UACC issued junior subordinated debentures (trust preferred securities) of $10.0 million through a subsidiary, UPFC Trust I. The trust issuer is a 100 percent owned finance subsidiary and the securities are fully and unconditionally guaranteed by Vroom Automotive Finance Corporation. The interest is paid quarterly at a variable rate, equal to SOFR + 3.05%. The final maturity of these securities is on October 7, 2033; however, they can be called at par any time at the Company’s discretion.