Small investors who were mocked for running the shares of bankrupt car rental company Hertz last year won surprisingly on Wednesday when the company was bought at auction for as little as $ 8 per share.
Word of the deal signaled a much more malicious “reddit rally”, sending Hertz shares down 68 percent to $ 6.20 per share at $ 5.72 per share on Wednesday.
Shareholders are usually wiped out in bankruptcy. But Wednesday’s Miami-based auction silenced Wall Street firms for control of the car rental business, when epidemic-weary consumers were hitting the street again in drums.
Wednesday’s deal – representing expectations for a rapid epidemic recovery – even stunned Jamre Jackson, Hertz chief financial officer until September 2020.
“During the early days, nobody knew that we were going to survive. Even six months ago, no one could predict such demand for our cars, ”he told the Post.
Last year’s frenzied trading at Hertz, which presided over Gametop’s meteoric rise, pushed Hertz up from a 42.5-cent-a-share low stock to $ 6.25 a share in June, after it sought bankruptcy protection.
Trading at Hertz became so heated that then-SEC president Jay Clatten said on national television that the watchdog was concerned about the company’s plans to raise funds by selling potentially worthless stock.
Wednesday’s deal – extracted from the hashed by Knighthead Capital Management, Certificates Management, and Apollo Global Management, including Hertz for $ 7.4 billion.
In addition to making the entire lender, the buyer has agreed to pay $ 8 for each share through a $ 240 million cash payment to equity investors, plus a chance to participate in a $ 1.6 billion rights offer or warrant for about 20 Is for percentage. Of the reorganized company.
One possible winner is billionaire Carl Icahn. He lost $ 1.8 billion after his 39 percent stake in Hertz went bankrupt in May last year. But a source aware of the situation says that Econ has since popped into Hertz shares and hopes to make some money at Wednesday’s auction.
The extent to which Hertz investors have recovered from bankruptcy is astonishing. Last year, Hertz bonds traded at 10 cents a share.
As the economy began to heat up in March, Knighthead and Citares were paying shareholders nothing and only 70 cents on the dollar, representing the company’s $ 4.6 billion debt on the deal for unsecured creditors I went.
Creditors declined that bid, and soon after private equity firms Centerbridge Partners and Warburg Pincus made a better offer, putting the bid war into motion.
The stock also closed at $ 3.69 a share on Tuesday, with investors suggesting it should not follow.
“We are very pleased that our planning process produced such a tremendous result for our creditors and shareholders,” said Paul Stone, President and Chief Executive Officer of Hertz, in a statement.
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