Hertz Global (NYSE: HTZ) will be required to sell approximately 182,000 vehicles from its rental fleet in the latest deal that it has struck with lenders. The arrangement is part of a deal to cut debt owed to lenders from US$11 billion to that of US$5 billion.
We’ve extensively covered the story of the downward spiral of Hertz, whom was formerly one of the largest vehicle rental agencies globally. The company was struck hard by the coronavirus pandemic, which effectively halted global travel, resulting in plummeting demand for rental vehicles as consumers simply stayed at home. The company was forced to file for a Chapter 11 bankruptcy back in late May as a result.
Despite the bankruptcy, Hertz was notable in that retail investors continued to buy the equity despite its financial situation, with so much demand that the company attempted to do a $1.0 billion at-the-market offering for effectively worthless paper before the SEC put a formal halt to the process.
Now, under an agreement with its lenders the company will look to right the ship as it sells off its assets to potentially remain operational. The company has benefited in that demand for used vehicles has increased significantly in light of enormous job losses across America as consumers look to cut expenses. As a condition of the deal, Hertz will also be required to make US$650 million in lease payments, as per court documents. The total amount owing on lease agreements is in dispute however, with lenders indicating that the figure could be as high as $1.8 billion.
Under the terms of the arrangement, Hertz will be required to offload 182,000 vehicles, the equivalent of US$6.0 billion in debt, by year end.
Information for this briefing was found via BNN Bloomberg. 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.
