Subsequent Events

3 Months Ended

Mar. 31, 2017

NOTE 4 — SUBSEQUENT EVENTS

Organizational Transactions

In connection with the IPO, Carvana Co. and Carvana Group completed the following transactions (the “Organizational Transactions”):


•	Carvana Group converted its outstanding Class C Preferred Units into 43,089,005 Class A Units;

•

Carvana Group amended and restated its LLC Operating Agreement to, among other things, (i) eliminate a class of preferred membership interests, (ii) provide for LLC Units consisting of two classes of common ownership interests in Carvana Group (Class B common units held by certain employees and consultants subject to vesting and a participation threshold (“Class B Units”), and Class A common units held by the other Carvana Group owners, including the Garcia Parties and Carvana Sub (“Class A Units”)), and (iii) appoint Carvana Sub as the sole manager of Carvana Group;


•	Carvana Co. amended and restated its certificate of incorporation to, among other things, provide for Class A common stock and Class B common stock;


•	Carvana Co. issued shares of Class B common stock to holders of Class A Units, on a four-to-five basis with the number of Class A Units they own, for nominal consideration;


•	Carvana Group issued an aggregate of 766,500 Class B Units to executive officers and certain other employees, in each case with a participation threshold based on the public offering price;

•

Certain employees of Carvana Group were issued an aggregate of 358,000 restricted shares of Class A common stock pursuant to the terms of Carvana Co.’s new 2017 Omnibus Incentive Plan. Carvana Co. also awarded options to purchase an aggregate of 417,000 shares of Class A common stock to approximately 100 employees of Carvana Group and directors of Carvana Co., with an exercise price set at the initial public offering price;

•

Carvana Co. and Carvana Sub entered into an exchange agreement (the “Exchange Agreement”) with the holders of LLC Units (the "LLC Unitholders”) pursuant to which the LLC Unitholders (other than Carvana Sub) are entitled to exchange LLC Units, together with shares of Class B common stock, in the case of Class A Units, for shares of Class A common stock in accordance with the terms of the Exchange Agreement or, at Carvana Co.’s election, for cash; and

•

Carvana Co. entered into a tax receivable agreement (the “Tax Receivable Agreement”) with certain of the LLC Unitholders that provides for the payment by Carvana Co. to certain LLC Unitholders of 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income taxes we actually realize (or, under certain are deemed to realize in the case of an early termination payment by us, a change in control or a material breach by us of our obligations under the Tax Receivable Agreement, as discussed below) as a result of (i) the increase in Carvana Co.’s proportionate share of the existing tax basis of the assets of Carvana Group and an adjustment in the tax basis of the assets of Carvana Group reflected in that proportionate share as a result of purchases of LLC Units from the LLC Unitholders (other than Carvana Sub) by Carvana Sub and (ii) certain other tax benefits related to Carvana Co.’s entering into the Tax Receivable Agreement, including tax benefits attributable to payments that Carvana Co. is required to make under the Tax Receivable Agreement.

As a result of the Organizational Transactions and the IPO:


•	Carvana Co.'s investors collectively own 15.0 million shares of the Class A common stock (including 1,333,333 shares of Class A common stock purchased by the Garcia Parties in the IPO) and Carvana Co. holds, indirectly through Carvana Sub, 18.6 million LLC Units after the transfer of approximately 170,000 LLC Units to Ernest Garcia, II in exchange for his 0.1% ownership interest in Carvana, LLC;


•	certain of Carvana Co.'s current employees own 0.4 million shares of restricted Class A common stock issued pursuant to the 2017 Omnibus Inventive Plan;


•	the Garcia Parties own 122.4 million LLC Units, 1,333,333 shares of Class A common stock and 97.9 million shares of Class B common stock;


•	the remaining LLC Unitholders own 29.8 million LLC Units and 19.3 million shares of Class B common stock;


•	the Class A common stock collectively represent approximately 100% of the economic interest, and 1% of the voting power, in Carvana Co.; and


•	the Class B common stock collectively represent approximately 99% of the voting power in Carvana Co.

Carvana, LLC

Subsequent Event [Line Items]

Subsequent Events

NOTE 14 — SUBSEQUENT EVENTS

Verde Credit Facility

Subsequent to March 31, 2017, the Company drew an additional $15.0 million under the Verde Credit Facility bringing the total outstanding balance to $35.0 million. On May 3, 2017, Carvana Co. completed the IPO, and as a result, the Verde Credit Facility was terminated and the Company repaid the entire outstanding principal of $35.0 million and accrued interest using a portion of the proceeds from the IPO.

Carvana Co. Initial Public Offering

On May 3, 2017, Carvana Co. completed an initial public offering ("IPO") of 15,000,000 shares of Class A common stock at a public offering price of $15.00 per share. Carvana Co. received $210.7 million in proceeds, net of underwriting discounts and commissions. Carvana Co. contributed the net proceeds to its wholly owned subsidiary, Carvana Sub, that in turn acquired 18,750,000 newly-issued LLC Units in Carvana Group, of which approximately 170,000 LLC Units were transferred to Ernest Garcia, II in exchange for his 0.1% ownership interest in Carvana, LLC. In turn, Carvana Group repaid $35.0 million of outstanding borrowings under the Verde Credit Facility and paid expenses incurred in connection with the Organizational Transactions.