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Hertz Gets $1.65 Billion Bankruptcy Loan From Apollo, Others

Jeremy Hill and Steven Church
·2 mins read

(Bloomberg) -- Hertz Global Holdings Inc. has arranged a new $1.65 billion financing package to help it reorganize while in bankruptcy. Shares more than doubled after the plan was announced.

If the bankruptcy loan wins court approval, a group of the company’s first-lien lenders will provide the money at an initial interest rate of 7.25 percentage points above the London interbank offered rate, the car rental giant said Friday. The group will also collect an undisclosed amount of fees. Lenders who signed a letter committing to fund the loan include Apollo Global Management, Diameter Capital Partners and Silver Point Capital, according to court documents.

Hertz’s stock soared as much as 178% Friday morning in New York to trade at $2.86.

As much as $1 billion of the debt can be used for vehicle acquisition in the U.S. and Canada, while up to $800 million can be used for working capital and general corporate purposes, Hertz said in a statement.

The proposed loan is a sign that senior lenders are confident in Hertz’s ability to reorganize and pay them back. The loan matures at the end of 2021 and has a limited number of restrictions that would cause a default, Hertz said in court papers. Under the deal, the company must file a Chapter 11 reorganization plan by Aug. 1, 2021.

Hertz filed for bankruptcy in May when the near-total shutdown of the global travel industry caused rentals to drop dramatically. Despite the Chapter 11 filing, which would normally wipe out shareholders, Hertz’s stock price remained so high that the company tried unsuccessfully to sell shares to fund the case.

Bloomberg earlier reported the car rental company was negotiating with creditors on a potential loan package to get it through the reorganization process. The new financing needs approval from Hertz’s bankruptcy judge, and a hearing is set for Oct. 29.

The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington). To view the docket on Bloomberg Law, click here.

(Updates with share prices in first, third paragraph.)

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