Hertz Global Holdings, Incorporated has successfully completed its Chapter 11 restructuring process — as its Plan of Reorganization was confirmed by the United States Bankruptcy Court and cleared to emerge from reorganization on Thursday, June 10, 2021 — and has emerged as a financially and operationally stronger company which has positioned itself well for the future with increased liquidity; a significantly deleveraged balance sheet, more efficient operations, and growth opportunities for the long term as it capitalizes on the rebound of travel.
Hertz Successfully Emerges From Chapter 11 Bankruptcy 2021
Adversely affected by the current 2019 Novel Coronavirus pandemic, voluntary petitions for reorganization under Chapter 11 in the United States Bankruptcy Court for the District of Delaware were filed by Hertz Global Holdings, Incorporated back in May of 2020 in an effort to create a strengthened and more robust financial capital structure that best positions the rental car company for the future as it navigates its way through what could be a prolonged recovery for both the travel industry and the global economy overall.
“With over $5.9 billion of new equity capital being provided by Hertz’s new investor group, led by Knighthead Capital Management LLC, Certares Opportunities LLC, and certain funds managed by affiliates of Apollo Capital Management, L.P., Hertz has reduced its corporate debt by nearly 80% and significantly enhanced its liquidity to fund operations and future growth”, according to this official announcement which was released yesterday, Wednesday, June 30, 2021. “Specifically, Hertz has eliminated nearly $5.0 billion of debt, including all of Hertz Europe’s corporate debt. In addition, Hertz has emerged with a new $2.8 billion exit credit facility (including an undrawn $1.3 billion revolving credit facility) and a $7.0 billion asset-backed vehicle financing facility, each having terms the Company views as extremely favorable. The aggregate interest rate on the Company’s new ABS financing is less than 2.0%.”
The nearly $19 billion which was owed to creditors by Hertz Global Holdings, Incorporated has been paid in full — while returning substantial value to its shareholders in the process.
“In tandem with its financial restructuring, Hertz also executed on a series of operational initiatives to create a more focused and profitable enterprise”, according to the aforementioned press release. “Among these actions, Hertz launched a cost reduction program that is generating significant savings, right-sized its fleet across both its U.S. and International businesses, optimized its location footprint, negotiated cost reductions and concessions at certain airport locations, and completed the sale of its Donlen fleet leasing business for $891 million in cash. In addition, Hertz focused on meeting changing demand through its portfolio of neighborhood rental locations as a complement to its airport business. These efforts, combined with a sharp increase in car rentals in the U.S. and the continued strength in used car sales, are putting the Company on track for strong financial results in 2021.”
Some of the 30 subsidiaries of Hertz Global Holdings worldwide which were included in the filing are:
- The Hertz Corporation
- Thrifty Car Rental, Incorporated
- Dollar Rent A Car, Incorporated
- Firefly Rent A Car LLC
- Hertz Car Sales
- Hertz Aircraft, LLC
- Donlen Corporation
About Hertz
Walter L. Jacobs founded Rent-a-Car Incorporated in Chicago in 1918 at the age of 22 with a fleet of a dozen Model T Ford cars to rent to customers.
John Daniel Hertz, Senior — who was born as Schandor Herz in Slovakia in 1879 — founded the Yellow Cab Company in Chicago in 1915. He purchased Rent-a-Car Incorporated from Jacobs in 1923 and renamed the company Hertz Drive-Ur-Self System. By 1925, Hertz was generating annual revenues of approximately $1 million with what became a coast-to-coast rental network before Hertz sold the company to General Motors in 1926.
In the years before John Hertz purchased the rental car company back from General Motors, Hertz offered the first advanced reservations; a new program called Rail-Drive through which Hertz provided a rental vehicle for vacationers right when they stepped off the train; released the first rental car charge card in 1926; opened its first rental car location at Midway Airport in Chicago in 1932; introduced the first one-way rental plan in 1933; and opened its first European location in France in 1950.
In 1972, Hertz introduced the #1 Club — which is now known as Hertz Gold Plus Rewards — that was a computerized data system that allowed club members to use Express Service. The service eventually expanded its benefits, allowing club members to bypass the airport counter and move directly from the airplane to a Hertz rental car in 1989. The 1990s brought the on-board navigation system NeverLost and the first Internet web site for the company.
In 2013, Hertz developed and expanded its portfolio of rental car brands at approximately 10,300 locations across the globe with the combination of Hertz, Dollar, Thrifty and Firefly.
Additional information pertaining to the 100-year history of Hertz is found here.
Summary
For court documents or filings, please visit https://restructuring.primeclerk.com/hertz or call (877) 428-4661 or (929) 955-3421.
As of the end of the day yesterday, Wednesday, June 30, 2021, the stock price of Hertz — symbol HTZGQ — was $8.74; but it was as low as 40 cents per share earlier this year and was $1.27 per share back on Tuesday, April 6, 2021. The stock price suffered a precipitous fall from its all-time high of $106.15 on Friday, August 22, 2014 to $7.71 on Friday, June 9, 2017. However, holders of shares of the current stock are expected to get $1.53 per share in cash; one share of the newly issued stock for every ten shares of the current stock; and approximately 66 percent of a warrant — which will have a maturity of 30 years — per current share. The new ticker symbols — which are effective as of today, Thursday, July 1, 2021 — will be HTZZ for Hertz common stock; and HTZZW for warrants.
Hertz is far from being a perfect company — especially with its stealth perceived significant devaluation of its Hertz Gold Rewards frequent renter loyalty program last year and its draconian points usage cancellation policy…
…but I am glad not to see its demise, as the services of Hertz have provided me with good value overall over the years — such as the multiple times when my original rental car rate would automatically be reduced in cost or when I saved hundreds of dollars on a single car rental.
However, recent rates for vehicle rentals have been significantly more expensive overall due to the shortage of vehicles — and will remain that way in general for the short term. I still intend to write an article pertaining to examples of that…
All photographs ©2017, ©2018, and ©2020 by Brian Cohen.
