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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowOnline car retailer Carvana LLC, which entered the Indianapolis market in late 2016, now plans to open a Hancock County facility where it will refurbish and store used cars awaiting sale and initially employ about 200 workers.
The Carvana site will occupy a portion of the 145-acre, Mount Comfort-area site where Indianapolis-based trucking company Celadon Group Inc. had intended to build a $28 million headquarters. Celadon pulled the plug on the project last fall so it could focus on resolving a host of financial and accounting issues.
Carvana and Celadon have been tight-lipped about the project, and neither company immediately responded to IBJ phone messages on Friday morning.
But Mike Dale, executive director of the Hancock County Area Plan Commission, said Carvana has secured all the necessary local permits and approvals, and construction crews are already working at the site.
In conversations with county officials, Dale said, Carvana has described the Mount Comfort project as a refurbishment center. Carvana acquires used cars at auction, then performs needed repairs, body work and painting. The refurbished cars then are stored on site until a customer purchases them online. Carvana then delivers the purchased vehicle to the customer.
“They have all green lights from the county to proceed,” Dale said. “They say there could be between 4,000 and 5,000 cars on their property, either refurbished or waiting to be refurbished.”
According to Carvana financial filings, the company currently has an inventory of more than 9,500 used vehicles, all of which are inspected and reconditioned before resale. As of the end of last year, Carvana had four inspection and reconditioning centers: in Winder, Georgia; Blue Mound, Texas; Tolleson, Arizona; and Delanco, New Jersey.
A Carvana representative told the Hancock County Plan Commission last month that the site would employ about 200 people to start and could grow to 450 people over time, according to Greenfield’s Daily Reporter newspaper.
A key piece of the deal fell into place last week, when Celadon reached its ninth amendment to its current credit agreement with lenders.
Previous versions of the agreement, which were negotiated as Celadon worked through its financial issues, prohibited the trucking company from selling off certain real estate and equipment assets.
This new agreement specifically allows Celadon to sell to Carvana 70 acres at the Mount Comfort site, located at 6299 W. County Road 300 South, at a purchase price “not less than $12.5 million."
The sale is expected to close by the end of May, Celadon Chief Financial Officer Thom Albrecht told IBJ on Friday afternoon.
The actual purchase price includes both the land value and a partially-constructed building already on the site, Albrecht said, though he declined to reveal the amount.
“We’re not prepared to share the variance of how much more the price can be above $12.5 million,” Albrecht told IBJ in an e-mail.
Carvana declined an option to purchase the remaining 75 acres, Albrecht said, adding that Celadon is “in healthy discussions with another prospective buyer” for that parcel.
The agreement also allows Celadon to sell a parcel it owns in Kernersville, North Carolina, for $2.7 million, and to sell three of its refrigerated truck trailers for “not less than $34,000” per trailer.
Celadon will apply the proceeds from these sales to its debts, the agreement says.
Carvana, which was founded in 2012, is in rapid growth mode, although the company has not yet turned a profit.
The company launched in its first market, Atlanta, in 2013. Indianapolis was Carvana’s 20th market. By the end of last year, Carvana was operating in 44 markets.
Between 2012 and 2017, the company had accumulated net losses of $317 million. But the company’s revenues are on the rise, growing from $130 million in annual sales in 2015 to $859 million in annual sales last year.
The company had 1,864 employees as of Dec. 31, 2017.
Carvana became a publicly traded company in April 2017, with its initial public offering priced at $15 per share.
On Thursday, Carvana announced a follow-on public offering of 11 million additional shares of its Class A common stock priced at $27.50 per share. Of those 11 million shares, Carvana is selling 6.6 million shares and existing stockholders are selling 4.4 shares.
Shares of Carvana were trading at $27.35 late Friday morning.
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