Business & Investment

Hertz’s competing reorganization plan hinges to pending details

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Hertz Global Holdings Inc.’s fate relies on still pending details behind the two officially submitted bids, court documents say.

Hertz is negotiating with Knighthead Capital Management and Certares Management and with competing investors backed by Centerbridge Partners, Warburg Pincus LLC, and Dundon Capital Partners.

According to the company, “significant unresolved issues” include the value of Hertz after new investment by each side and the final decision on how much lower creditors will regain. Answering these and other questions will help car lessors decide which sponsor to choose to get out of bankruptcy.

Relation: Hearts Eyes Bankruptcy Ends with $ 4.2 Billion Share Sale

In the filings, Hearts acknowledged the strategic benefits inherent in the Nighthead and Celtales bids. Certares is a private equity fund company focused on travel, tourism and hospitality, and its existing investments include American Express Global Business Travel, Internova Group and TripAdvisor.

Hertz said that in 2023, Hertz calculated that interest, taxes, depreciation, and pre-amortization revenue could potentially increase from $ 136 million to $ 147 million in 2023. I did.

According to the document, under both current proposals, Hertz will escape bankruptcy as a public company. In the previous Knighthead-Certares project, Hertz left court protection as a private sector, primarily owned by these two project sponsors.

Billions of dollars proposal

Hertz is seeking court approval of a generic rights offering that any of its investment groups can use to fund the restructuring of Hertz. Another bid is possible because no official planning sponsor has been chosen, but given the multi-billion dollar proposal outlined by Nighthead and Centerbridge, that’s unlikely. In the early days of Hertz’s bankruptcy, stock prices rose, even though company officials said it was doubtful that shareholders would get anything back.

“If shareholders are going to do something, it’s better to do it right away and do a big check,” Bloomberg distressed bond analyst Phil Brendel said in an interview on March 30. Now it’s an unsecured notebook holder. “

There are some unanswered questions, but according to court documents, both restructuring proposals will solve Hertz’s most pressing debt problem. Each pays the full amount to the senior lender, including the first lien and second lien bills. Subordinate debt, including debt held by bondholders and other unsecured creditors, acquires the right to purchase new shares at cash and discounted prices.

To pay the distribution to creditors, the company will sell $ 2.6 billion in new shares, underwrite a $ 1.3 billion term loan and set a $ 1.5 billion revolving credit line, court documents show.

The case is Hertz Corp. 20-11218 of the US Bankruptcy Court in Wilmington, Delaware.

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Hertz’s competing reorganization plan hinges to pending details Hertz’s competing reorganization plan hinges to pending details

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