Hertz Global Holdings completed its Chapter 11 restructuring process and emerged from bankruptcy. Hertz received bankruptcy court approval of its plan of reorganization on June 10. In doing so, bankruptcy judge Mary Walrath described the outcome as a “fantastic result” that “surpasses any result that I’ve seen in any Chapter 11 case that I’ve faced in my 20-plus years.”
With more than $5.9 billion of new equity capital being provided by Hertz’s new investor group, led by Knighthead Capital Management, Certares Opportunities and certain funds managed by affiliates of Apollo Capital Management, Hertz has reduced its corporate debt by nearly 80% and enhanced its liquidity to fund operations and future growth. Specifically, Hertz eliminated nearly $5 billion of debt, including all of Hertz Europe’s corporate debt. In addition, Hertz emerged with a new $2.8 billion exit credit facility (including an undrawn $1.3 billion revolving credit facility) and a $7 billion asset-backed vehicle financing facility. The aggregate interest rate on the company’s new ABS financing is below 2%.
“Faced with the epic and unprecedented challenges presented by the COVID-19 pandemic, and unfazed by early leadership changes, we stayed focused on stabilizing the business and seizing opportunities to mitigate losses and create value for our stakeholders,” Henry Keizer, chairman of Hertz’s outgoing board of directors, said. “When the economy began to show signs of recovery earlier this year, we were perfectly positioned to drive a competitive process that would maximize recoveries. The result — paying our nearly $19 billion of creditors in full and returning substantial value to our shareholders — is remarkable.”
In tandem with its financial restructuring, Hertz also executed on a series of operational initiatives. Among these actions, Hertz launched a cost reduction program, 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.
“Today marks a significant milestone in Hertz’s 103-year history,” Paul Stone, president and CEO of Hertz, said. “Through the relentless efforts of our board and team, we are moving forward in an incredibly strong position with an exciting road ahead of us. Now with a solid financial foundation, a leaner, more efficient operating model and ample liquidity to invest in our business, Hertz has outstanding potential to drive long-term profitable growth. Both in the U.S. and around the world, we are poised to capitalize on our industry leadership, deep operational expertise and iconic global brand.
“I am tremendously proud of all we have accomplished and confident that this is only the beginning in delivering even greater value to our stakeholders. Thank you to the Hertz team around the world and board of directors, to our new investor group, who bring extensive industry experience, and to our customers, franchisees, partners and shareholders for your confidence and support during this process. We look forward to a bright future as a vibrant part of the rebounding travel industry and as a trusted partner for our customers’ mobility needs.”
Hertz filed for Chapter 11 bankruptcy for its U.S. operations on May 22, 2020, following the onset of the COVID-19 pandemic, which had a severe and dramatic effect on travel demand. Hertz’s principal international operating regions, including Europe, Australia and New Zealand, were not included in the U.S. Chapter 11 proceedings.
Following Hertz’s restructuring process, the company’s creditors will receive payment in cash in full and existing shareholders will receive more than $1 billion of value. Shares of Hertz common stock will continue to be publicly traded on the over-the-counter market, until such time as the company relists on a national securities exchange. The new ticker symbols will be HTZZ for Hertz common stock and HTZZW for warrants. The symbols are effective today.
