(Bloomberg) — Hertz Global Holdings Inc. received a bid from Knighthead Capital Management and Certares Management to purchase the rental-car company out of bankruptcy for as much as $4.2 billion, according to court documents.
Under the plan, Knighthead and Certares would take control of Hertz when it emerges from its Chapter 11 reorganization, with the final value of the deal dependent on how much existing lenders participate in the financing. The bid is backed by a travel industry-focused investment fund that Knighthead and Certares created last year to take advantage of an expected rebound in companies that were disrupted by the Covid-19 pandemic.
Hertz was unable to weather the blows from the pandemic that peers Enterprise Holdings Inc. and Avis Budget Group Inc. also felt after decades of mismanagement — a plight that one former top executive summed up as a slow-moving train wreck.
Knighthead and Certares’s position would include a direct investment, a rights offering participation and buying Hertz’s existing unsecured debt. A hearing to approve the terms of the plan is scheduled for April 16.
The plan fully repays Hertz’s first-lien and second-lien creditors and gives unsecured bondholders the option to take a cash payout of 70% of their investments’ face value or roll their debt into new financing, according to a Hertz statement. The rental-car company would have $1 billion of new first-lien financing, a $1.5 billion revolving credit facility and a new asset-backed securitization facility under the deal.
Hertz filed for bankruptcy in May when the near-total shutdown of the global travel industry sent its rental revenues plunging. It made a short-lived effort to raise funds after its bankruptcy filing by selling stock but abandoned that offering after the U.S. Securities and Exchange Commission questioned the plan.
On Feb. 26, the company reported revenue for the fourth quarter of $1.2 billion, down 48% from the previous year’s $2.33 billion.
The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington). To view the docket on Bloomberg Law, click here.
(Updates with hearing, deal details and background throughout.)
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