Hertz exits Chapter 11 bankruptcy protection

September 2021 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

September 2021 Issue

In what it describes as “a significant milestone in its 103-year history”, Hertz Global Holdings, Inc., holding company of the Hertz Corporation, has successfully completed its Chapter 11 restructuring process.

Hertz filed for Chapter 11 for its US operations following the onset of the coronavirus (COVID-19), 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 Chapter 11 proceedings.

Following its restructuring process, Hertz’s creditors will receive payment in cash in full and existing shareholders will receive more than $1bn. Moreover, with over $5.9bn of new equity capital being provided by Hertz’s new investor group – led by Knighthead Capital Management LLC, Certares Opportunities LLC and funds managed by affiliates of Apollo Capital Management, LP – Hertz has reduced its corporate debt by nearly 80 percent and significantly enhanced its liquidity to fund operations and future growth.

“Faced with the unprecedented challenges presented by the COVID-19 pandemic, we stayed focused on stabilising the business and seizing opportunities to mitigate losses and create value for our stakeholders,” said Henry Keizer, chairman of Hertz’s outgoing board of directors. “When the economy began to show signs of recovery earlier this year, we were perfectly positioned to drive a competitive process that would maximise recoveries.”

Alongside its financial restructuring, Hertz has also executed on a series of operational initiatives to create a more focused and profitable enterprise. These include launching a cost reduction programme that is generating significant savings, right-sizing its fleet across both its US and international businesses, optimising its location footprint, negotiating cost reductions and concessions at certain airport locations, and completing the sale of its Donlen fleet leasing business for $891m in cash.

“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,” said Paul Stone, president and chief executive of Hertz. “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.

“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,” he continued. “I thank the Hertz team around the world, our board of directors and new investor group, who bring extensive industry experience, and to our customers, franchisees, partners and shareholders for their confidence and support during this process.

Hertz Global Holdings, Inc. operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognised globally.

Mr Stone concluded: “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.”

Fraser Tennant