ESTERO, Fla. - Hertz Global Holdings (OTC:HTZGQ), Inc. (NASDAQ: HTZ), a prominent player in the global car rental market, has upsized and priced debt offerings through its subsidiary, The Hertz Corporation. The company has successfully entered into agreements to issue $750 million in First Lien Senior Secured Notes and $250 million in Exchangeable Senior Second-Lien Secured PIK Notes, both due in 2029.
The upsized offering from the previously announced $500 million to $750 million in First Lien Notes carries a 12.625% interest rate, payable semi-annually starting January 15, 2025. These notes are set to mature on July 15, 2029. The Exchangeable Notes, bearing an 8.000% PIK interest, will also mature on the same date, with Hertz Corp. retaining the right to redeem these notes after July 20, 2027, under specific conditions.
Hertz Corp. plans to allocate the net proceeds from these offerings to reduce its $2.0 billion committed revolving credit facility, aiming to enhance liquidity. The credit facility will remain fully available post-transaction, with total commitments unaffected.
The Exchangeable Notes are initially convertible into shares of Hertz common stock at a rate of approximately 150.9388 shares per $1,000 principal amount, which equates to an initial exchange price of about $6.6252 per share. This price represents a significant premium over the June 20, 2024, closing price of Hertz's common stock.
The closing of the offerings, subject to customary conditions, is anticipated on or about June 28, 2024. The First Lien Notes and Exchangeable Notes will be guaranteed by Hertz Global Holdings, Rental Car Intermediate Holdings, LLC, and Hertz Corp.'s domestic subsidiaries, with the First Lien Notes secured by assets that also secure indebtedness under Hertz Corp.'s first lien credit facilities.
These debt instruments were offered to qualified institutional buyers and non-U.S. persons in transactions exempt from registration under the Securities Act of 1933. They will not be registered under the Securities Act or any state securities laws and cannot be offered or sold within the United States without registration or an applicable exemption.
This financial maneuver is disclosed in a press release statement by Hertz Global Holdings, Inc. and is part of the company's broader strategy to manage its capital structure and liquidity.
In other recent news, Hertz Global Holdings, Inc. has announced its intention to issue $750 million in debt to boost liquidity, a move that includes a $500 million First Lien Senior Secured Notes offering and a $250 million Exchangeable Senior Second-Lien Secured PIK Notes offering.
The company is also considering an additional sale of at least $700 million in secured debt. These decisions follow a significant quarterly loss of $1.28 per share, surpassing analysts' projected 44-cent loss, and the appointment of a new CFO, Scott Haralson, formerly of Spirit Airlines (NYSE:SAVE).
In addition, the company plans to shed approximately 30,000 vehicles from its fleet due to diminished demand and high repair costs from its electric vehicle business. BofA Securities has maintained its Underperform rating on Hertz with a steady price target of $3.00 after a comprehensive liquidity analysis, suggesting a potential EBITDA loss of about $700 million in 2024. Deutsche Bank (ETR:DBKGn) has also adjusted its outlook on Hertz, reducing the price target to $4.80 from $6 while maintaining a Hold rating on the stock.
These are recent developments for Hertz, a company striving to improve its financial position amidst challenging conditions. The company's financial strategy is under the guidance of the new CFO, who is expected to navigate these financial changes effectively. Despite the challenges, Hertz remains committed to its business operations and the pursuit of strategies to enhance profitability and growth.
InvestingPro Insights
In the context of Hertz Global Holdings, Inc.'s (NASDAQ: HTZ) recent financial maneuvers, several metrics and tips from InvestingPro provide a deeper understanding of the company's financial health and market position. Notably, Hertz operates with a significant debt burden, which is a critical factor to consider given the company's latest upsized debt offerings. This is echoed by an InvestingPro Tip highlighting that the company may have trouble making interest payments on its debt.
InvestingPro Data indicates that Hertz has a market capitalization of $1070.0 million, with a low Price to Book (P/B) ratio of 0.38 as of the last twelve months ending Q1 2024. This low P/B ratio could be seen as a sign that the company's stock is undervalued relative to its assets. Additionally, the company's P/E Ratio stands at 5.31, with an adjusted P/E Ratio for the same period being 4.59, which might suggest that the company is trading at a low earnings multiple compared to its peers.
Furthermore, recent performance metrics reveal that the company's stock price has experienced significant volatility. Over the last week, the price total return is 7.67%, which contrasts sharply with a one-month price total return of -30.77% and a six-month price total return of -66.28%. This volatility is also an InvestingPro Tip, implying that investors should brace for potential price swings.
For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available, which could offer further insights into Hertz's financial strategies and market performance. For instance, the tip that management has been aggressively buying back shares could be of interest to investors considering the company's current financial strategy.
To explore these insights in more detail, readers can visit https://www.investing.com/pro/HTZ. Moreover, users looking to subscribe to InvestingPro for a more in-depth analysis can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 23 additional InvestingPro Tips listed for Hertz that can help investors make more informed decisions.
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