Hertz gets enhanced proposal from Knighthead, Certares and Apollo

By Sarah Lizee

Olympia, Wash., May 4 – Hertz Global Holdings, Inc. confirmed Tuesday that it has received a revised proposal from affiliates of Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management, LP to provide equity capital required to fund Hertz's exit from Chapter 11.

The revised proposal contemplates funding Hertz's plan of reorganization through direct common stock investments totaling $2.9 billion, direct preferred stock investments totaling $1.5 billion and a rights offering to raise $1.36 billion.

The revised proposal includes an amended plan of reorganization that contemplates payment in full of all secured and unsecured funded debt and provides holders of common stock with $0.50 per share in cash and either 10-year warrants for a total of 10% of the reorganized company or, for eligible stockholders, the possibility of subscribing for shares of common stock in the rights offering.

The revised proposal is subject to a number of conditions, including approval by the bankruptcy court.

Hertz said its board of directors has not yet made any determination regarding the revised proposal.

As reported last week, the company obtained court approval of bid and auction procedures relating to the submission of alternative plan proposals.

At that point, Hertz had secured court approval of the disclosure statement for its fourth amended Chapter 11 plan after receiving enhanced proposals from both its current plan sponsors, Warburg Pincus LLC, Centerbridge Partners LP and Dundon Capital Partners LLC, and previous plan sponsors, Knighthead Capital Management, LLC and Certares Opportunities LLC.

While Hertz had said in its fourth amended disclosure statement that Warburg, Centerbridge and Dundon’s proposal was the highest and best proposal available at the time, the company said it may seek confirmation of a modified plan that embodies a different restructuring proposal with other sponsors.

Hertz asked the court to approve procedures that would provide Knighthead and Certares with a full and fair opportunity to present an enhanced proposal, and if necessary, provide Warburg, Centerbridge and Dundon with an opportunity to counter that proposal at the auction, while also assuring that the debtors will meet their goal of emerging by the end of June.

Knighthead and Certares had until 5 p.m. ET on May 2 to submit the enhanced proposal to the debtors. Warburg, Centerbridge and Dundon was given three business days to decide if they want to counter the offer. If so, an auction will be held on May 10.

Hertz is an Estero, Fla.-based car rental company. It filed Chapter 11 bankruptcy on May 22, 2020. The case number is 20-11218.

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