Hertz Global Holdings, Inc. (OTC: HTZGQ) will trade definitively and exclusively via the OTC-market, after it was previously announced that the car rental company would no longer be active on the NYSE. The ticker symbol has therefore also changed immediately into HTZGQ. This happened after the NYSE determined Hertz is no longer a suitable candidate for listing, following the filing of Chapter 11 on May 22, 2020. In an attached application Hertz, various subsidiaries and affiliates made voluntary requests for reorganization. The company now embarks on a reorganization process to realize a more efficient and stronger financial foundation.
Hertz’s major global operating regions are not subject to the US Chapter 11 litigation and are experiencing no significant change in normal and running business operations. Hertz’s franchise offices are not included in the Chapter 11 proceeding and are also continuing normal business.
Hertz wants to remove uncertainty from customers
Hertz explained to their customers in an official letter why the company filed for Chapter 11:
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company’s revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated this action. Our financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the Company for the future as we navigate what could be a prolonged travel and overall global economic recovery.” (Hertz, 2020)
|Saliva Covid Test – Strategy Going Forward Therma Bright – THRM TSX|
|Vegas Winners Rolls Dice – Coming Soon – Buy This Stock ?|
|Buffett Sells Banks – Airlines – Buys Gold|
|Pandemic Play – Dillards Department Store Soars Ahead – Buffett Sniffing Around !|
Several customers were also wondering if Hertz has sufficient liquidity or plans to obtain debtor-in-possession (DIP) financing.
Hertz assured its customers that, as of the May 22 filing date, it has sufficient cash to support ongoing operations. This liquidity enables the company to operate in the short term without financing from debtors. Depending on the duration of the crisis triggered by COVID-19 and its revenue impact, the company may seek access to additional cash, including through new loans as the reorganization progresses.
There still seems to be enough confidence in Hertz, as the figures of the share showed last Wednesday – which back then was still tradable on the NYSE. An increase of circa 13% was the result. This is quite remarkable for a company knowing a bankruptcy process as we see broader markets decline due to the pandemic. The approval of a loan can give the business a huge boost, although it has been found that many shareholders are currently considering other companies in the automotive sector to invest in.
Is the potential $5.56 billion loan realistic?
It is now known that Hertz has liquidated a part of its fleet, while it searches for new car models and is selling some of its current vehicles. That’s why Hertz is now planning a $4 billion loan to carefully replenish its fleet. This is in addition to the $1.65 billion loan that was given green light this week. This loan is badly needed for the car rental company to keep afloat during the bankruptcy. The current loan will be used in part to expand the fleet, while the remainder of the capital is for other business purposes.
Neither PSN nor its owners, members, officers, directors, partners, consultants, nor anyone involved in the publication of this website, is a registered investment adviser or broker-dealer or associated person with a registered investment adviser or broker-dealer and none of the foregoing make any recommendation that the purchase or sale of securities of any company profiled in the PSN website is suitable or advisable for any person or that an investment or transaction in such securities will be profitable. The information contained in the PSN website is not intended to be, and shall not constitute, an offer to sell nor the solicitation of any offer to buy any security. The information presented in the PSN website is provided for informational purposes only and is not to be treated as advice or a recommendation to make any specific investment. Please consult with an independent investment adviser and qualified investment professional before making an investment decision.