(Bloomberg) -- Carvana Co. said it’s offering to exchange as much as $1 billion of bond principal at below-par prices as the struggling online car seller works to restructure its debt load. 

The company is offering to swap five series of bonds, including its 5.625% unsecured notes due 2025 and 10.25% unsecured notes due 2030 for new secured notes due 2028 that pay 9% in cash or 12% in-kind, according to a statement Wednesday. The debt will be secured by a second-priority claim on assets including vehicles. 

Holders can swap their bonds for between 61.25 cents on the dollar and 80.875 cents on the dollar, depending on when they submit the notes. The early deadline for the swap, which offers the best terms for investors, is 5 p.m. on April 4 in New York. 

The company also said it moved its car auction business Adesa U.S. into an unrestricted subsidiary, a maneuver that can lay the groundwork for future debt issuance tied to that brand. J. Crew infamously drew investor ire after transferring intellectual property including its brand name into such a unit, and then using that collateral to issue debt. Adesa won’t be used to secure the new bonds, according to the statement.

The exchange comes as Carvana deals with deeply distressed debt and plunging shares. The company’s stock soared during the pandemic as a chip shortage sent used car prices soaring, but Carvana’s outlook has since soured. It posted a bigger-than-expected loss in February following its lowest retail unit sales in two years.

Carvana’s 10.25% bond due 2030 last changed hands at 53 cents on the dollar, according to Trace, and its shares dropped 94% in the past year through Tuesday. The shares jumped as much as 29% Wednesday before paring some of the gains to trade up 15% at $9.13 by 10:07 am in New York.

The company’s attempt to restructure its debt comes after a disastrous year in which it saw sales decline and and losses mount to $7.61 a share. Chairman and Founder Ernie Garcia built up used-vehicle inventory early in 2022, right before vehicle prices fell. Later in the year, he raised $2.3 billion in junk bond debt to fund the acquisition of Adesa, a used car auctioneer.

Garcia’s plans took a turn when used-car prices tumbled and rising interest rates kept some buyers away. The fourth quarter was particularly rough, with gross profit per vehicle falling by almost half to just over $2,200 a vehicle. The company’s costs have ballooned during its expansion binge, leading to net losses of more than $7,000 per vehicle sold, and the retailer burned $1.8 billion in cash for the year.

Despite the company’s difficulties, Garcia had told investors that he thinks the company has seen the worst with used-car profitability and a rebound is coming. His plan includes cutting annual costs by $1 billion a year and boosting gross per-vehicle profit above $4,000 again. If the plan works, Garcia said in February conference call, “we’ve got a real shot at not requiring additional capital.”

--With assistance from Rachel Butt, David Welch and Esha Dey.

(Updates with additional detail throughout.)

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