Hertz Global files plan of reorganization; statement hearing April 16

By Sarah Lizee

Olympia, Wash., March 2 – Hertz Global Holdings, Inc. filed a Chapter 11 plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the District of Delaware on Tuesday.

The plan contemplates that Knighthead Capital Management, LLC and its affiliates and Certares Opportunities LLC and its affiliates will serve as the plan sponsors and will commit to invest up to $4.2 billion to purchase up to 100%, but not less than a majority, of the common stock of the reorganized Hertz.

The proposed investment will, together with a new $1 billion first-lien financing, a new $1.5 billion revolving credit facility, and a new asset-backed securitization facility to finance Hertz's U.S. vehicle fleet, provide the basis for the proposed plan and the funding needed for Hertz to complete its financial restructuring and emerge from Chapter 11 in early- to mid-summer.

The equity investment will take the form of a direct purchase of up to roughly $2.3 billion of common equity of reorganized Hertz, together with a commitment to backstop a rights offering for up to about $1.9 billion of common equity in reorganized Hertz, which will be made available to unsecured creditors as part of the plan.

The company said the proposed plan would provide for a new, sustainable capital structure that would substantially reduce Hertz's corporate debt and provide for a less leveraged vehicle debt structure.

If confirmed, the plan would provide for the payment in cash in full of all of Hertz's existing first- and second-lien debt and all administrative and priority claims, including the obligations owed under Hertz's $1.65 billion debtor-in-possession facility.

Confirmation of the proposed plan would also result in a 70% cash recovery to general unsecured creditors, including the guarantee of the €725 million euronote facility issued by Hertz's affiliate, HHN, subject to the right of the holders of funded unsecured debt claims to elect to take a portion of their recovery in the form of common equity in reorganized Hertz.

In addition, some obligations of Hertz's international businesses, which are not in Chapter 11, will be restructured on a consensual basis.

A hearing on approval of the plan sponsors’ investment and the disclosure statement is scheduled for April 16.

White & Case LLP is serving as legal adviser, Moelis & Co. is serving as investment banker, and FTI Consulting is serving as financial adviser.

Hertz is an Estero, Fla.-based car rental company. It filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on May 22, 2020. The case number is 20-11218.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.