Hertz Global Holdings Inc. is on the hunt for a $ 1.5 billion bankruptcy loan after regulators blocked the rental car company from pursuing a sale of what would likely be worthless, according to people familiar with the matter.
Hertz reached out to existing debtors this week, as well as potential investors outside, for a loan with debtors owning $ 1.1 billion to $ 1.5 billion, the people said. Hertz did not respond to requests for comment.
The car rental company sought out Chapter 11 in May without a deal with creditors and without a bankruptcy loan to finance its business, unusually for a company of Hertz’s large setup with roughly $ 19 billion in debt. At the time, the company’s chief financial officer said Hertz had enough cash on hand to finance his operations at least through the first phase of the case.
But as the company’s bankruptcy slips amid the ongoing fallout from the coronavirus pandemic on the move, the need for funding has become more acute.
WSJ Pro Bankruptcy reported earlier that Hertz was in talks with its lenders to get funding that would help keep it afloat in bankruptcy.
Hertz’s need for cash became more critical after the company pulled the plug on its plan to raise up to $ 500 million by selling its stake during the reorganization.
The company had sought to profit from a speculative frenzy fueled by risk-hungry day traders, believing it was a golden opportunity to raise cheap capital to cover its bills in Chapter 11 procedures that are often expensive are.
Estero, Fla. -Base Hertz raised $ 29 million and sold its likely worthless stock before the SEC discouraged selling more.
Now the car rental company needs cash to keep its doors open through the fall as the Covid-19 pandemic continues to destroy the global travel sector.
Hertz lost a total of $ 852 million over the three months ended June 30, according to a submission of securities.
Complicating matters is the fact that Hertz does not have its fleet of a rental car and cannot give those assets as collateral to lenders. Hertz bondholders have the rights to the car’s fleet, so collateral that provides a DIP loan would be derived from their corporate business itself, including its brands, intellectual property, client systems and concessions at airports across the country.
Soma Biswas contributed to this article
Write to Alexander Gladstone at [email protected] and Becky Yerak at [email protected]
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