With 4.2 billion dollars from two financial investors, the company is to come out of the bankruptcy protection process.
The insolvent US car rental company Hertz is to be made afloat again with a 4.2 billion dollar (3.5 billion euros) capital injection from two financial investors. With the fresh money, Hertz could get out of the bankruptcy protection proceedings (“Chapter 11”) by the summer, the Florida company said on Tuesday.
Hertz became one of the first victims of the corona crisis in May 2020 when the demand for rental cars among business travelers and tourists collapsed. A debt burden of 19 billion dollars turned out to be too high for the traditional company, which also owns the Dollar and Thrifty brands. “We have realigned our business (…) and are preparing for an increasing demand after the pandemic subsides,” said CEO Paul Stone on Tuesday.
According to the insolvency plan, the travel industry specialist financial investors Knighthead Capital Management and Certares Opportunities are to take over up to 100 percent of Hertz. They are ready to invest around $ 2.3 billion directly in Hertz. In addition, they are supposed to secure a $ 1.9 billion capital increase, which will initially be offered to unsecured creditors.
This is intended to significantly reduce the debt burden. Hertz wants to finance its rental car fleet significantly less through loans in the future. The plan has yet to be approved by the bankruptcy court in the state of Delaware on April 16.
Sales slumped by 46 percent
Last year, Hertz's sales slumped 46 percent to $ 5.3 billion. The loss rose to $ 1.7 billion (2019: 58 million). Hertz was hit by the crisis much more than the German rival Sixt, who wants to take advantage of the weakness of domestic providers on the hotly contested US market.
So far, Sixt has had a market share of between one and two percent in the USA. “Our competitors are not doing well,” said CEO Erich Sixt at the annual press conference. Two of the three remaining US car rental companies are financially shaky.
