Hertz Gets Court Approval for Bankruptcy Deal With Top Bidders -- Update
By Becky Yerak
Hertz Global Holdings Inc. won bankruptcy-court approval to hand
control of the rental-car company to Knighthead Capital Management
LLC, Certares Management LLC and other investors that won a bidding
war over the company.
While shareholders typically receive nothing in corporate
bankruptcies, the winning bid for Hertz will provide a distribution
of more than $7 and as much as $8 a share to the company's current
owners, according to Hertz's estimates.
The winning bid reflected a dramatic rise in Hertz's prospects
in recent weeks as investor groups competed to buy the company out
of bankruptcy. Earlier offers from potential bidders offered
nothing for Hertz's equity, and, as recently as mid-April, the
company said its shareholders would come away empty-handed in the
chapter 11 proceedings. Hertz filed for bankruptcy last May,
fighting for survival as its revenue plummeted during the
"Today we're on the verge of a remarkable recovery," company
lawyer Tom Lauria said at a virtual hearing Friday in the U.S.
Bankruptcy Court in Wilmington, Del.
Covid-19 vaccinations and a rebound in consumers' eagerness to
vacation are expected to reinvigorate the travel business and ease
Hertz's path out of chapter 11. Hertz's creditors will be paid in
full, and shareholders will see a substantial return, Mr. Lauria
Rachel Strickland, a lawyer for bondholders that were outbid for
control of the company, said they would fight to ensure that they
would have everything paid to them that was due, including accrued
Under the bankruptcy deal, Knighthead, Certares and its
co-investors are buying the bulk of Hertz's equity for roughly $2.8
billion. Shareholders also are backing a roughly $1.6 billion
equity rights offering, while Apollo Global Management Inc. is
purchasing $1.5 billion in preferred equity.
Having gotten the auction results approved, Hertz is expected to
seek confirmation of its chapter 11 plan next month, its last major
step in court before leaving bankruptcy.
Hertz's trip through bankruptcy court was notable for the
interest it sparked among individual investors who piled into the
stock despite the bankruptcy filing, driving its price up nearly a
Hertz tried to capitalize on the rally last June by selling
stock, but suspended efforts to sell shares after the Securities
and Exchange Commission raised questions. Hertz was later delisted
from the New York Stock Exchange, but continued to trade over the
At the Friday court hearing, Mr. Lauria said the Hertz
bankruptcy "proves that no one, not even the SEC or the New York
Stock Exchange, knows the future." Hertz was shot down, Mr. Lauria
said in regards to its plans to sell shares last year.
The SEC didn't immediately respond to a request for comment. The
NYSE declined to comment.
Write to Becky Yerak at firstname.lastname@example.org
(END) Dow Jones Newswires
May 14, 2021 18:17 ET (22:17 GMT)
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