Hertz has selected and approved a proposal to bring it out of bankruptcy, prompting its shares to soar by over 55 per cent.
According to MarketWatch, the rental car giant has approved a revised proposal from Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management to provide the equity capital that will allow Hertz to exit bankruptcy.
The $6 billion bid will provide direct stock investments worth $2.781 billion and include the issuance of $1.5 billion of new preferred stock to Apollo and a fully backstopped rights offering to the company’s existing shareholders to purchase $1.635 billion of additional common stock. Through the deal, current shareholders will get approximately $1.50 per share in cash alongside a small slice of the reorganized company’s equity.
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“The revised plan would provide for the payment in cash in full of all administrative, priority, secured, and unsecured claims in the Chapter 11 cases and would deliver significant value to the Company’s existing shareholders,” the rental car company said in a statement.
Hertz filed for bankruptcy in May 2020 at the height of the coronavirus pandemic. In June last year, Hertz attempted to sell shares to partially fund the bankruptcy and for a brief time, this seemed to work as Robinhood traders sent the share price to over $5. It crashed soon after and has been trading at around $1. On the back of this latest bankruptcy news, the company’s share price is now approaching $6.
