Knighthead Capital Management LLC and Certares Opportunities LLC will buy up to 100% of Hertz’s shares for $4.2 billion. The two investment firms expect to help Hertz out of bankruptcy by early- to mid-summer.
The funds are expected to finance the rental agency‘s US car fleet and slash corporate debt. Indeed, according to Reuters, on Tuesday the company said it had filed a proposed reorganization with the US bankruptcy court for the District of Delaware.
The court will look at the terms of the proposed investment at a hearing in April.
“We are excited to reach this important milestone in our restructuring process,” said CEO Paul Stone. “The support of the Plan sponsors demonstrates their confidence in Hertz’s growth potential; moreover, they bring valuable experience in the travel and leisure industry.”
Hertz filed for bankruptcy protection in May 2020. At the time, the company blamed the sudden impact of the coronavirus pandemic on travel. Despite continuing operations with the $1 billion in cash it had in reserves, it was reportedly in $17 billion of debt at the time.
Read More: Hertz Now Wants To Borrow $4 Billion To Order A New Fleet Of Rental Cars
Hertz quickly laid off half its staff, or about 20,000 people. It was later revealed that shortly before declaring bankruptcy, the company paid more than $16 million in bonuses to higher-ups, including $700,000 to Stone and $600,000 to Chief Financial Officer Jamere Jackson.
In November, reports revealed that Hertz was looking for $4 billion in order to refresh its rental fleet. The company liquidated parts of its fleet in 2020 and will now look to get newer vehicles to be ready for when customers start renting vehicles again.
The company also announced that it would be expanding its vehicle subscription service late last year. Billed as a way to keep a car without a long-term commitment, the brand wanted to make Hertz My Car go nationwide.
Prices for the service ranged from $599 per month for economy cars and mid-size sedans to $1,399 per month for SUVs and large trucks. Maintenance, liability, and roadside assistance are also included in the plan.
