Hertz’s existing equity holders vote to accept Chapter 11 plan

By Sarah Lizee

Olympia, Wash., June 8 – Hertz Global Holdings, Inc.’s Chapter 11 plan was accepted by holders of existing parent interests, according to a ballot summary filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, holders of 25.08 million interests, or 97.82% in amount, voted to accept the plan, while holders of 560,034 interests, or 2.18% in amount, voted to reject the plan.

A court hearing to confirm Hertz’s plan of reorganization is scheduled for June 10.

As previously reported, Hertz chose Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management, LP as its plan sponsors following a bidding war with investor group Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners, LLC. The company filed a new Chapter 11 plan of reorganization and related disclosure statement following its selection of the revised proposal.

The plan provides for about $705 million from the purchase of common stock in the reorganized company by the plan sponsors at a per share price based on a discount to the equity value of the plan.

It also provides for $1.62 billion from the purchase of common stock under a fully funded rights offering, and $385 million from the purchase of convertible preferred stock by the plan sponsors.

The preferred stock will have a dividend compounded quarterly at 3% per annum for the first three years after issuance, payable in kind, will have a conversion price based on a pre-conversion equity valuation of $4.942 billion, will not be redeemable for the first three years, will be generally voted on an as-converted basis with shares of common stock, and will be mandatorily convertible after the first anniversary of issuance based on a volume weighted average trading price formula.

The plan also provides for $1.3 billion in proceeds from an anticipated new exit term loan facility.

Under the plan, all administrative, priority and secured claims will be paid in cash in full.

Holders of claims with respect to the unsecured senior notes and the letter-of-credit facility dated Dec. 13, 2019 will receive 47.1% of the common stock in the reorganized company and subscription rights for the rights offering.

Holders of the company’s €725 million European vehicle debt will be paid in cash in full.

Each holder of a general unsecured claim will receive cash payments of the greater of its pro rata share of $550 million in the aggregate up to 100% of the allowed amount of the general unsecured claim, and 82% of the allowed amount of the claim.

The company’s existing equity will be canceled and existing equity holders will receive their pro rata share of new 10-year warrants to purchase, in the aggregate, 14% of the reorganized company’s common stock, subject to some conditions, with an exercise price to be determined based on an equity value of the company of $8 billion; cash of $175 million; and $250 million of cumulative perpetual non-convertible preferred stock with a dividend rate of 7.25%.

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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