(Bloomberg) — Hertz Global Holdings Inc. said it chose an “enhanced” offer from Centerbridge Partners, Warburg Pincus and Dundon Capital Partners to provide equity capital for the rental-car company’s exit from Chapter 11.
The deal, which is subject to bankruptcy court approval, has the support of holders of more than 85% of the company’s unsecured notes, Hertz said, a level of backing that gave it a “clear advantage” over a competing offer. The company earlier received a rival proposal from Knighthead Capital Management and Certares Management.
“We look forward to emerging from Chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market,” Paul Stone, Hertz’s chief executive officer, said in the statement Saturday.
The company remains on track to exit from its bankruptcy in June. The announcement comes a day after the U.S. Centers for Disease Control and Prevention said vaccinated individuals don’t need a Covid test and don’t need to quarantine when traveling domestically.
Hertz filed for bankruptcy in May when the near-total shutdown of the global travel industry sent its rental revenues plunging. It became a popular stock among day traders, who sent shares of the bankrupt company soaring against conventions. Hertz made a short-lived effort to raise funds after its bankruptcy filing by selling stock, but abandoned it after the U.S. Securities and Exchange Commission questioned the plan.
The new investors will bring operational expertise to Hertz, including experience with companies such as Santander Consumer USA, Dana Inc., and Car Trade, the company said.
The supporting noteholders have agreed to support the exchange of the unsecured funded debt claims against Hertz for about 48.2% of the equity in the reorganized company and the right to purchase an additional $1.6 billion of equity. They have also committed to purchase, or otherwise backstop, the full $1.6 billion of equity being offered to the holders of Hertz’s unsecured funded debt.
Holders of 725 million euros ($852 million) of European vehicle notes will be paid in cash in full under the plan, while creditors of general unsecured claims will get about 75 cents on the dollar, it said. Hertz’s existing equity will be canceled and receive no distribution.
(Adds quotes from Hertz’s CEO, background)
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