Hertz files for the share offering

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Hertz Global Holdings

(ticker HTZZ) has filed an offer of capital in what the car rental company has called its “Re-IPO” as the company seeks exposure to investors after it exits protection from the law. bankruptcies on June 30.

As a sign of Hertz’s financial strength, all shares will be sold by existing holders. Hertz said he plans to apply for listing on Nasdaq under the symbol HTZ. Its shares have traded lightly on the Pink Sheets since the company’s bankruptcy.

Hertz, who is based in Estero, Fla., Filed a filing to offer $ 100 million in shares, but did not disclose how many shares it would offer or their price. This will come with future deposits.

The company’s roadshow will be led by Mark Fields, recently appointed interim CEO, former chief executive of Ford Motor.

The deal will come at a time when investors are excited about the car rental industry amid a recovery in leisure travel, high prices and high prices for used cars, reflecting the shortage continues to new vehicles that brakes rental cars. fleets. Hertz comes out of record profitability in the second quarter. The company has a strong balance sheet, with net cash of $ 300 million at the end of the second quarter, excluding debt backed by its fleet of vehicles.

Hertz shares, which closed at $ 25.70 on Friday, have risen about 30% so far in October. Rival actions

Budget Opinion Group

(CAR), which finished Friday at $ 150.97, has risen over 60% over the past month. Hertz is now valued at $ 12 billion.

Hertz shares have been listed on the stock exchange since the emergence of the bankruptcy, but activity has been relatively low as only 3% of the 471 million Hertz shares were eligible for trading. These shares went to the former shareholders of Hertz before the bankruptcy reorganization.

The remainder of the shares, or around 457 million shares, were purchased primarily by institutional holders as part of the reorganization, but were not eligible for public trading. These restricted shares will be eligible for sale on December 30 – six months after the emergence of bankruptcy – under SEC Rule 144, subject to lock-in and other limitations, Hertz said. This could create a large inventory surplus.

“A significant portion of our issued and outstanding common stock is eligible to be sold in the market in the near future, which could cause the price of our common stock to drop significantly, even if our business is doing well,” said Hertz. .

“We issued a total of 456,969,438 shares under the EPCA (a share purchase agreement) and the offering of rights which are ‘restricted securities’ under Rule 144 and, in assuming we stay current with our reporting obligations under the Exchange Act, may be sold under Rule 144 as of December 30, 2021, subject to foreclosure restrictions and other limitations, ”Hertz said .

There have been exchanges between institutions of restricted stocks at a significant discount compared to the public market.

Hertz noted that “the trading price on the Nasdaq may have no relation to historical prices on the OTC notice board.”

Investors expect Hertz to wait until it announces what will likely be strong third quarter earnings before pricing the stock offering. Hertz could highlight initiatives to better manage its fleet, obtain better prices, reduce customer wait times at counters, and develop management services for what could be autonomous vehicle fleets in local markets. years to come.

While Hertz has warned of excess stock, there could be strong demand for stocks from the stock offering given robust rental car market conditions and expectations that the situation will continue. in 2022 due to expectations of a continuing shortage of new vehicles.

The industry is dominated by three companies, Hertz, Avis and the private sector. Given Hertz’s limited liquidity, Avis was the only way for institutional investors to gain exposure to the sector.

An analyst recently told Barron’s that the once dysfunctional industry is now a “functional oligopoly with pricing power.”

There were five listed underwriters:

Goldman Sachs

JP Morgan,

Morgan stanley

Barclays and Deutsche Bank Securities.

Write to Andrew Bary at [email protected]

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