Hertz: Knighthead, Certares and Apollo take lead in plan bidding war

By Sarah Lizee

Olympia, Wash., May 5 – Hertz Global Holdings, Inc. said Wednesday that it has determined that the revised reorganization proposal made by Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management, LP is superior to the current plan sponsors’ proposal.

Centerbridge Capital Partners, LP, Warburg Pincus LLC and Dundon Capital Partners, LLC’s agreement still remains in effect, and the current plan sponsors have until Friday to make a counteroffer, according to a press release.

If a counteroffer is made, an auction will be held on Monday.

As previously reported, the revised proposal from Knighthead, Certares and Apollo 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 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.

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 and previous sponsors Knighthead and Certares.

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.

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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