So which news is correct the one where they are going to completely wipeout shareholders or the one saying they will keep shareholders?
Bankrupt car-rental firm Hertz' lenders are proposing a shakeup that would take a newly reorganized company public, report says
Shalini Nagarajan
Mar. 5, 2021, 07:24 AM
Hertz' lenders are proposing a shakeup that would take a reorganized company public, according to Bloomberg.
If Hertz approves the proposal, its planned sale to two investment funds for $4.2 billion would not go through.
The creditor group believes Hertz has an enterprise value of $5 billion.
Hertz's unsecured creditors are proposing a restructuring of the car-rental firm that clashes with the company's plan to exit from bankruptcy via a sale to two investment funds, Bloomberg reported Thursday.
As part of the planned shakeup, the lenders want to convert their holdings in the bankrupt firm into shares of the reorganized company which could be taken public, Bloomberg said, citing sources.
If the proposal is approved by Hertz' board, the company would no longer go ahead with its planned sale to Knighthead Capital Management and Certares Management for $4.2 billion. Hertz began negotiations with potential buyers in November, according to court documents.
The creditors view Knighthead's bid, which values Hertz at $5.85, as too low, Bloomberg reported. They believe Hertz has an enterprise value of $5 billion and could fetch more under the group's reorganization plan. The proposal hasn't yet been sent to Hertz and terms aren't fixed as yet.
Hertz did not immediately respond to Insider's request for comment.
Among options being considered, Hertz' stock would become public upon its exit from bankruptcy, according to Bloomberg. The company's creditor group counts Alliance Bernstein, Bank of America, Invesco, Fir Tree Partners, and JPMorgan Asset Management among its members.
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Hertz, one of the first so-called "meme stocks" in Reddit's Wall Street Bets subreddit, gained immense popularity as its stock price grew tenfold in a matter of weeks last year. In mid-2020
Hertz Stock Nosedives as Bankruptcy-Exit Plan Threatens to Wipe Out Shareholders
Shares of Hertz Global Holdings Inc. continued their tumble toward zero Wednesday, one day after the car-rental company unveiled a restructuring proposal to exit bankruptcy that will wipe out existing shareholders.
Shares of Hertz fell to 88 cents, losing 26% on the day. The fall marked the second day of bruising losses for the company’s stock after it tumbled 28% on Tuesday to $1.19.
Under Hertz’s restructuring proposal, shareholders will receive no distribution, meaning they will receive no recovery from the proposed deal. Hertz said it plans to be a private company when it leaves bankruptcy. The car-rental company, one of many companies deeply wounded by the coronavirus pandemic, filed for bankruptcy protection last May.
But unlike many companies whose businesses suffered due to stay-at-home restrictions, Hertz’s story took on new life after individual investors piled into the stock. In an event that preceded the GameStop Corp. phenomenon, individual investors sent shares of Hertz soaring over several days early last June after the company entered chapter 11 proceedings.
In the trading session following Hertz’s filing for bankruptcy protection, shares crashed to 56 cents. They then surged above $5.50 less than two weeks later—a nearly 900% rally. In the days after, however, shares tumbled. They have since largely traded below $2 this year before finally sliding below $1 Wednesday.
Hertz Gets $4.2 Billion Rescue Bid From Investment Firms To Exit Bankruptcy
BY SEBASTIEN BELL | POSTED ONMARCH 3, 2021 5
Knighthead Capital Management LLC and Certares Opportunities LLC will buy up to 100% of Hertz’s shares for $4.2 billion. The two investment firms expect to help Hertz out of bankruptcy by early- to mid-summer.
The funds are expected to finance the rental agency‘s US car fleet and slash corporate debt. Indeed, according to Reuters, on Tuesday the company said it had filed a proposed reorganization with the US bankruptcy court for the District of Delaware.
The court will look at the terms of the proposed investment at a hearing in April.
“We are excited to reach this important milestone in our restructuring process,” said CEO Paul Stone. “The support of the Plan sponsors demonstrates their confidence in Hertz’s growth potential; moreover, they bring valuable experience in the travel and leisure industry.”
Hertz filed for bankruptcy protection in May 2020. At the time, the company blamed the sudden impact of the coronavirus pandemic on travel. Despite continuing operations with the $1 billion in cash it had in reserves, it was reportedly in $17 billion of debt at the time.
Hertz quickly laid off half its staff, or about 20,000 people. It was later revealed that shortly before declaring bankruptcy, the company paid more than $16 million in bonuses to higher-ups, including $700,000 to Stone and $600,000 to Chief Financial Officer Jamere Jackson.
In November, reports revealed that Hertz was looking for $4 billion in order to refresh its rental fleet. The company liquidated parts of its fleet in 2020 and will now look to get newer vehicles to be ready for when customers start renting vehicles again.
The company also announced that it would be expanding its vehicle subscription service late last year. Billed as a way to keep a car without a long-term commitment, the brand wanted to make Hertz My Car go nationwide.
Prices for the service ranged from $599 per month for economy cars and mid-size sedans to $1,399 per month for SUVs and large trucks. Maintenance, liability, and roadside assistance are also included in the plan.
