Lenders plan to take Hertz publicly after bankruptcy

There is a battle going on at Hertz that could determine whether the car rental company – and the original “mem stock” – remains a publicly traded company, The Post has learned.

Hertz proposed to go bankrupt on Tuesday by putting a group of new investors on the driver’s seat, including Knighthead Capital Management, Certificate Opportunities and Larry Fink’s BlackRock.

Investors have offered to spend between $ 2.3 billion to $ 4.2 billion for a controlling stake on Hertz, which will be held privately.

But Hartz’s unsecured lenders, a group that includes JP Morgan, Fidelity and hedge fund Pentwater Capital, consider putting a break on that plan in favor of its own proposal to pull the company out of bankruptcy through an initial public offering Are doing, sources said.

The IPO plan, presented to Hertz, but not yet in bankruptcy court, calls for unsecured lenders to convert their debt into stock and then “immediately list” the company on an exchange, closer to lenders A source told the Post. .

“I think the process of selling the company has really just begun,” this person said. “Our group controls the vote. Anyone wanting to buy Hertz does not have to kiss our ring. “

Indeed, the unsecured lender, a group that also includes Bank of America and Marathon Asset Management and AllianceBernstein, owns more than 60 percent of the company’s $ 4.6 billion in debt, which sources say is the judge of Delaware’s bankruptcy. It can be difficult to approve a sale over their objections.

The lenders plan to judge their IPO plan until the knighthead deal is sweetened. It currently values ​​Hertz’s unsecured loans at around 70 cents on the dollar while catering to first- and second-lien lenders.

Plans for a post-bankruptcy Hertz IPO come as small investors buy popular small-cap stocks on trading forums such as Reddit’s WallStreetBets, or so-called “meme stocks.” In fact, Hertz was one of the first stocks to rubbish on Reddit after its sale was crushed by an epidemic lockdown – resulting in a buying frenzy that saw bankrupt company shares last year as high as $ 5.53 per share Was sent to the level.

Of course, the existing shareholders will be wiped out, regardless of which plan wins the day, a result that is reflected in Hertz’s share price of 87 cents per share.

Sources said that new investors willing to buy Hertz are personally calling on junior lenders to come to an agreement. Sources said skeptical lenders have to point to rival carmaker Avis, which has doubled since October amid rising expectations as people will reverse the journey by getting vaccinated against Kovid-19.

On Wednesday, the Hertz rival closed at a six-year high of $ 60.85 per share.

“This price is cheaper than Avis,” agreed Hamza Mazari, Jefferies analyst for the Knighthead deal.

Avis, by contrast, is trading at 8.6 times, pre-Kovid earnings. And on Tuesday, Hertz estimated that revenue would increase from about $ 6.1 billion to $ 8.6 billion in 2023 this year as more people receive vaccinations.

“They are trying to steal the company,” a junior lender source told the Post. “This price seems disastrous. Imagine if a public company took an offer at a price 14 percent below the trading price?

Be the first to comment

Leave a Reply

Your email address will not be published.


*