It has been over two months since Hertz Global Holdings Inc (NYSE: HTZ) filed for Chapter 11 bankruptcy and infamously attempted to raise raise funds via offering worthless shares to amateur Robinhood Investors. Now, the car rental company has finally announced it will be pursuing debtor-in-possession financing as a means of accumulating some much-needed cash in order to pay off its creditors.
When clueless investors flocked to the bankrupt Hertz stock back in May, the worthless stock rallied to astounding, and rather puzzling levels. This sparked a light bulb moment for Hertz, who infamously attempted an offering of up to US$500 million to its gullible Robinhood following. The company was able to raise nearly US$29 million before it was abruptly questioned by Securities and Exchange Commission, which ultimately led to the termination of the “genius” plan.
Now nearly two months later, Hertz still continues to struggle to make payments on its European fleet amid a market that has seen little in a demand rebound. In the second quarter, the company’s revenues dropped by 67%, which amounted to a US$847 billion loss. Hertz now only has approximately $1.4 billion in cash left, which will certainly come in handy given that the company has begun making monthly payments of US$108 million in July until the end of the year to its securities holders.
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Hertz has been granted its last and final extension until September 30 to get its financials into some sort of muddled order and begin making payments on its fleet in the UK and Europe. However, in order to scrounge enough cash to make its debt obligations, the car rental company plans to continue selling off its US fleet of an additional 182,000 cars, after it had already sold 100,000 between June and July.
Following Monday’s news, Hertz stock jumped over 12% – most likely induced by amateur investors’s excitement over a possible comeback for the bankrupt company.
Information for this briefing was found via Hertz Global Holdings Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
