Hertz Hurts! Car-Renter Shares Routed On Reports Restructuring Adviser Hired

It would appear an already over-levered car-rental business is not “essential“?

Just days after The Wall Street Journal reported that Hertz is preparing for a possible bankruptcy filing after the rental-car company failed to make lease payments to preserve cash amid the Covid-19 pandemic, the journal reports tonight that the firm has hired an additional adviser to help prepare for a planned bankruptcy filing, according to people familiar with the matter.

Revolving lender Barclays is working with Latham & Watkins LLP, while a group of term loan lenders has engaged financial adviser Houlihan Lokey Inc., and law firm Arnold & Porter Kaye Scholer LLP, the people said.

For veterans of past credit cycles, it should be no real surprise that the rental car business is on its last legs, but CDS spreads this time are screaming default is imminent (and that recovery values for any debt are extremely low)…

Source: Bloomberg

Hertz has $17 billion worth of debt, which includes $3.7 billion of corporate bonds and loans and $13.4 billion of vehicle-backed notes.

Last week, we ‘mocked’ the stock price remaining ever hopeful that is has some value ($650 mm market cap)…

Source: Bloomberg

All of that is out the window tonight as HTZ is down almost 30% after hours…

Hertz shares are well on their way to zero… as the bonds are trading at just 18c on the dollar…

In recent months, both Hertz and rival Avis have cut executive pay and resorted to furloughs and job cuts, with Hertz last month laying off about 10,000 employees in North America. Avis said Monday it would try to borrow $400 million for general purposes.

And before they beg for a bailout, even before the pandemic, Hertz and its rivals were struggling with losing customers to ride-hailing firms such as Uber and Lyft.