Coronavirus: Car rental firm Hertz files for bankruptcy

Hertz could file for bankruptcy ‘as soon as this weekend': report

Hertz's bankruptcy protection filing has not come as a surprise.

The company, the release adds, says it has than $1 billion in cash on hand to support its ongoing operations. In fact, the long-running car-rental company in the USA has reportedly been in a critical financial condition earlier this month, citing a 73 percent drop in shares over the past three months.

With almost $19bn (£15.6bn) of debt and roughly 38,000 employees worldwide as of the end of 2019, Hertz is among the largest companies to be undone by the pandemic. According to the report, Hertz's petition covers USA and Canadian operations but not its businesses in Europe, Australia, and New Zealand.

Hertz has listed 567,600 vehicles in its USA fleet on its employ past year, all or majority of which are either bought or leased - far from the usual buyback agreement with automakers.

Hertz did not immediately respond to a request for comment.

There have been claims the bankruptcy could affect the price of cars.

Hertz could file for bankruptcy ‘as soon as this weekend': report

"Hertz may have little choice but to scale down its operations and sell assets to pay down its significant secured debt", Joseph Acosta, a partner in the bankruptcy practice at the law firm Dorsey & Whitney, said in an email. Hertz disclosed on April 29 that it had missed substantial lease payments related to its rental cars.

Hertz has until Friday to make about $400 million in lease payments for its fleet of vehicles or extend a forbearance agreement with its creditors, the news outlet reported.

The more than a century old auto rental firm, whose largest shareholder is billionaire investor Carl Icahn, is reeling from government orders restricting travel and requiring citizens to remain home.

White & Case LLP is the company's legal adviser, Moelis & Co.is the investment banker, and FTI Consulting Inc.is providing financial advice.

Icahn's holding company is Hertz's largest shareholder, with a 38.9% stake in the company, according to FactSet. Today, the company's business is spread to 12,400 locations worldwide.

Subscribe now to stay ahead with the most trusted business news source.

Related:

Comments


Other news