ESTERO, Fla., June 30, 2016 /PRNewswire/ -- Hertz Global
Holdings, Inc. (NYSE: HTZ) is receiving proceeds of
approximately $2 billion from the
previously announced separation of its equipment rental business
into a separate, publicly traded company. The transaction was
completed at 5 p.m. U.S. Eastern
today. Following today's transaction and the related 5-for-1
spin distribution, Hertz Global expects to begin trading on
July 1, 2016, with approximately 85
million common shares issued and outstanding.
The company will use the proceeds to pay down a portion of its
corporate debt as it focuses on continuing to strengthen its car
rental and related services business. In addition, the Hertz
Global Board of Directors has authorized a $395 million share repurchase program as a means
to enhance shareholder value.
"Completing the separation of the equipment rental business
delivers on the commitment our board made to shareholders in
March 2014," said John Tague, president and chief executive
officer. "Over the past twelve months, we've prepared the business
unit to successfully operate as a stand-alone, publicly traded
company by resizing its operations, and recruiting and installing a
new management team as well as a board of directors with deep
industry and public company experience."
Improving the fundamentals of Hertz Global's core car rental
business
The separation of the equipment rental business was one aspect
of the company's plan to focus on its core rental car
business. Over this same twelve-month period, the company
made significant progress improving that businesses' fundamentals,
including:
- Completing a comprehensive refresh and sizing of the North
American fleet, resulting in a lower-age, lower-mileage fleet that
has lower maintenance expense
- Successfully migrating Dollar and Thrifty operations to the
company's common counter and financial systems, completing
integration of the Nov. 2012
acquisition of Dollar Thrifty Automotive Group, Inc.
- Improving customer satisfaction across the Hertz, Dollar and
Thrifty brands
- Achieving cost savings of approximately $230 million in 2015 and planning for an
additional $350 million in cost
savings for 2016
- Beginning a comprehensive upgrade of the company's IT
infrastructure, systems and applications
- Rebuilding the Hertz Global management team with executives
with broad travel industry experience and completing the relocation
of the company's headquarters in Nov.
2015
- Making a strategic investment in Luxe, an on-demand valet
parking company, and
- Broadening the company's rental car market opportunity through
U.S. supply agreements with ride sharing companies Uber and
Lyft.
Hertz Global has also strengthened its liquidity and balance
sheet over the past twelve months though several actions. The
company sold the majority of its stake in CAR Inc., China's largest rental car company, while
extending its commercial agreement to 2023. From these stock sales,
Hertz Global received $476 million,
which it used to partially fund its previous share repurchase
program. In addition, Hertz Global executed a series of debt
transactions since the beginning of the year that will
significantly reduce the company's interest expense and extend its
corporate debt maturity schedule dates. As a result, interest
expense is expected to decline by approximately $45 million in the second half of 2016 and
approximately $90 million in 2017
related to the debt reduction associated with the spin proceeds and
the redemption of its 7.5% Senior Notes due in 2018. In
addition, no significant corporate debt maturities are due until
2019.
"We've accomplished a great deal to refocus the company on being
an industry leader positioned to capitalize on opportunities in the
evolving transportation market," Tague said. "We are today a
considerably stronger company with great prospects for performance
improvement and poised to deliver on our three-to-five year plan
target of 16-18 percent EBITDA margins."
About Hertz Global
Hertz Global operates the Hertz, Dollar, Thrifty global care
rental brands as well as regional brands in approximately 10,000
corporate and licensee locations throughout approximately 150
countries in North America,
Europe, Latin America, Asia, Australia, Africa, the Middle
East and New Zealand. Hertz
Global is the largest worldwide airport general use car rental
company with approximately 1,635 airport locations in the U.S. and
more than 1,320 airport locations internationally. Product and
service initiatives such as Hertz Gold Plus Rewards, NeverLostĀ®,
Carfirmations, Mobile Wi-Fi and unique vehicles offered through the
Adrenaline, Dream, Green and Prestige Collections set Hertz Global
Holdings apart from the competition. Additionally, Hertz Global
owns the vehicle leasing and fleet management leader Donlen
Corporation, operates the Hertz 24/7 hourly car rental business in
international markets and sells vehicles through its Rent2Buy
program. For more information about Hertz Global, visit:
www.hertz.com.
Cautionary Note Concerning Forward-Looking Statements
Certain statements contained in this release include
"forward-looking statements." These statements often include words
such as "believe," "expect," "project," "potential," "anticipate,"
"intend," "plan," "estimate," "seek," "will," "may," "would,"
"should," "could," "forecasts" or similar expressions. These
statements are based on certain assumptions that Hertz Global has
made in light of its experience in the industry as well as its
perceptions of historical trends, current conditions, expected
future developments and other factors it believes are appropriate
in these circumstances. Hertz Global believes these judgments are
reasonable, but you should understand that these statements are not
guarantees of performance or results, and actual results could
differ materially from those expressed in the forward-looking
statements due to a variety of important factors, both positive and
negative, that may be revised or supplemented in subsequent reports
on Forms 10-K, 10-Q and 8-K.
Among other items, such factors could include: the effect of our
separation of our equipment rental business and ability to obtain
the expected benefits of any related transaction; changes to our
senior management team; our ability to remediate the material
weaknesses in our internal controls over financial reporting;
levels of travel demand, particularly with respect to airline
passenger traffic in the United
States and in global markets; significant changes in the
competitive environment, including as a result of industry
consolidation, and the effect of competition in our markets on
rental volume and pricing, including on our pricing policies or use
of incentives; an increase in our fleet costs as a result of an
increase in the cost of new vehicles and/or a decrease in the price
at which we dispose of used vehicles either in the used vehicle
market or under repurchase or guaranteed depreciation programs;
occurrences that disrupt rental activity during our peak periods;
our ability to achieve and maintain cost savings and efficiencies
and realize opportunities to increase productivity and
profitability; our ability to accurately estimate future levels of
rental activity and adjust the size and mix of our fleet
accordingly; our ability to maintain sufficient liquidity and the
availability to us of additional or continued sources of financing
for our revenue earning equipment and to refinance our existing
indebtedness; our ability to realize the operational efficiencies
of the acquisition of Dollar Thrifty Automotive Group, Inc.; our
ability to maintain access to third-party distribution channels,
including current or favorable prices, commission structures and
transaction volumes; an increase in our fleet costs or disruption
to our rental activity, particularly during our peak periods, due
to safety recalls by the manufacturers of our vehicles and
equipment; a major disruption in our communication or centralized
information networks; financial instability of the manufacturers of
our vehicles and equipment, which could impact their ability to
perform under agreements with us and/or their willingness or
ability to make cars available to us or the rental car industry on
commercially reasonable terms; any impact on us from the actions of
our franchisees, dealers and independent contractors; our ability
to maintain profitability during adverse economic cycles and
unfavorable external events (including war, terrorist acts, natural
disasters and epidemic disease); shortages of fuel and increases or
volatility in fuel costs; our ability to successfully integrate
acquisitions and complete dispositions; our ability to maintain
favorable brand recognition; costs and risks associated with
litigation and investigations; risks related to our indebtedness,
including our substantial amount of debt, our ability to incur
substantially more debt and increases in interest rates or in our
borrowing margins; our ability to meet the financial and other
covenants contained in our Senior Credit Facilities, our
outstanding unsecured Senior Notes and certain asset-backed and
asset-based arrangements; our ability to successfully outsource a
significant portion of our information technology services or other
activities; changes in accounting principles, or their application
or interpretation, and our ability to make accurate estimates and
the assumptions underlying the estimates, which could have an
effect on earnings; changes in the existing, or the adoption of new
laws, regulations, policies or other activities of governments,
agencies and similar organizations where such actions may affect
our operations, the cost thereof or applicable tax rates; the
effect of tangible and intangible asset impairment charges; our
exposure to uninsured claims in excess of historical levels;
fluctuations in interest rates and commodity prices; and our
exposure to fluctuations in foreign exchange rates.
Additional information concerning these and other factors can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
You should not place undue reliance on forward-looking
statements. All forward-looking statements attributable to Hertz
Global or persons acting on its behalf are expressly qualified in
their entirety by the foregoing cautionary statements. All such
statements speak only as of the date made, and Hertz Global
Holdings undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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SOURCE Hertz Global Holdings, Inc.