Hertz bought out of bankruptcy after $ 4.2bn from investors

Hertz Global Holdings has received a bid from Knighthead Capital Management and Certares Management to purchase the rental- car company out of bankruptcy for as much as $ 4.2bn, according to court documents.

Under the plan, Knighthead and Certares would take control of Hertz when it emerges from its Chapter 11 reorganisation, 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 in 2020 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 and Avis Budget Group 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- and second- lien creditors and gives unsecured bondholders the option to take a cash payout of 70 percent of their investments’ face value or roll their debt into new financing, according to a Hertz statement. Under the deal, the rental- car company would have $ 1bn of new first- lien financing, a $ 1.5bn revolving credit facility, and a new asset- backed securitisation facility.

Hertz filed for bankruptcy in May 2020 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 US Securities and Exchange Commission questioned the plan.

On February 26, the company reported revenue for the fourth quarter of $ 1.2bn, down 48 percent from the previous year’s $ 2.33bn.