BlackRock Inc., Ares Management Corp. and Knighthead Capital Management are also part of the group, which is being advised by White & Case LLP and PJT Partners Inc. and includes fewer than ten lenders in total, according to one of the people.
Representatives for each of the lenders and Carvana didn’t immediately comment.
The aim of the group is to present a united front in negotiations around new financing or a debt restructuring for Carvana, a one-time hedge fund darling that has seen its stock plunge 97% this year because of investor concerns over its long-term prospects.
The company’s bonds have been languishing below 50 cents on the dollar, indicating that investors believe the company is at a high probability of default. Bonds held by the group will trade separately from those held by the non-participating creditors and any new buyers will be bound by the terms of the cooperation agreement, one of the people said.
Carvana’s credit outlook has deteriorated due to declining prices for used cars, rising interest rates and a heavy debt load. The company has cut thousands of jobs this year in an effort to slash costs and slow its cash bleed.
