Hertz Floats Bankruptcy Exit Led by Investor Group

Hertz [HTZ] Global Holdings Inc. proposed exiting bankruptcy by midyear under the control of new investors, buoyed by an expected rebound in travel and borrower-friendly credit markets.

Hertz’s restructuring proposal, filed Tuesday, would resolve one of the largest debt defaults stemming from the Covid-19 pandemic. Under the plan, Knighthead Capital Management LLC, Certares Management LLC and other co-investors would pay between $2.3 billion and $4.2 billion for a controlling equity stake in the rental-car operator.

The proposed deal, which requires approval from the U.S. Bankruptcy Court in Wilmington, Del., could be challenged by other creditors and investors, including by junior bondholders that have been making their own play for control of Hertz.

The company filed for bankruptcy protection last May with roughly $19 billion in debt after the coronavirus pandemic curbed air and ground travel, especially for business, sending Hertz’s global revenue down 70% in April 2020 from a year earlier. Stay-at-home orders also eroded demand for used vehicles, a pillar of the business.

To reduce costs, Hertz consolidated rental locations, negotiated with airports to defer payments and laid off roughly 11,000 U.S. employees, most of whom were previously furloughed.

Source: Geo news