Carvana (NYSE:CVNA) shares surged more than 29% intra-day today after the troubled online auto dealership revealed a significant debt restructuring plan that increases its chances of avoiding bankruptcy.

The restructuring involves postponing a large bond redemption deadline by three years from 2025 and offering payment-in-kind (PIK) to conserve cash.

Bondholders can exchange bonds with a nominal value of $1 billion for new notes that pay higher interest but don't fall due until 2028, with payment options of 9% annually in cash or 12% on a PIK basis.

The restructuring will include the 5.625% unsecured notes due in 2025 and the 10.25% unsecured notes due in 2030. The debt will be secured by a second-priority claim on assets such as vehicles, and the exchange prices offer will range from $0.6125 to $0.8087 on the dollar, depending on when the notes are submitted. Despite the pandemic boom, Carvana had never been profitable and reported a significant loss of $1.6 billion last year, despite its revenue more than tripling since the last full year before the pandemic.