BY Richard Summerfield
Hertz Global Holdings Inc has selected an ‘enhanced’ restructuring offer from a consortium of company bondholders and private equity (PE) investors that have agreed to supply the billions of dollars in equity capital the company requires to exit Chapter 11 bankruptcy protection.
A consortium made up of Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC has been chosen to sponsor Hertz’s exit from Chapter 11 along with bondholders that agreed to take control of the reorganised company. Hertz remains on track to exit bankruptcy protection in June.
The offer from the PE consortium was chosen ahead of a rival offer from Knighthead Capital Management LLC and Certares Management LLC, according to papers filed in the US Bankruptcy Court in Wilmington, Delaware.
Under the terms of the restructuring deal, the supporting noteholders have given approval for the exchange of their unsecured funded debt claims against the company for approximately 48.2 percent of the equity in the reorganised company, and the right to purchase an additional $1.6bn of equity in the future.
Hertz’s restructuring plan requires the approval of the bankruptcy court and will be subjected to a creditor vote. Hertz said Saturday that more than 85 percent of its unsecured bondholders, the biggest voting class in the bankruptcy, support the proposal backed by Centerbridge, Warburg and Dundon.
“We are pleased to be moving forward with an enhanced proposal supported by our largest creditor constituency and that delivers excellent value to all our stakeholders,” said Paul Stone, president and chief executive of Hertz. “This plan accomplishes all the goals we set out to achieve through our financial restructuring. Our new sponsors combined with our strong leadership team will bring significant operational experience across fleet financing and management, which will benefit all of our stakeholders. We look forward to emerging from Chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market.”
Last week, Hertz Global Holdings completed the $850m sale of Donlen Corp, which it operated as a wholly-owned subsidiary for nearly a decade. Under the terms of that deal, Athene Holding Ltd paid $891m in cash for Donlen, a business which Hertz acquired for $250m in September 2011.
Hertz filed for bankruptcy protection in May 2020 amid the dramatic downturn in travel during the early stages of the COVID-19 pandemic, which had a significant impact on the car rental business. The company had planned to raise funds by selling stock, but the US Securities and Exchange Commission took issue with that plan.
News: Hertz selects Chapter 11 exit plan backed by Centerbridge, Warburg, Dundon