Hertz is back from the brink, stock goes on a wild ride

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Fox Business 01 July, 2021 - 05:02pm 40 views

What will happen to Hertz stock after bankruptcies?

Hertz Global Holdings emerged from bankruptcy Wednesday after paying off its creditors in full and providing a recovery of about $1.4 billion to its common shareholders. ... Current shareholders will get a package of cash, 3% of the stock in the reorganized company, and warrants for 18% of the reorganized company. Barron'sHertz Shares Rise as Bankruptcy Exit Approaches

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The U.S. has been suffering from a rental car shortage as more people get vaccinated against the coronavirus and travel picks back up. FOX Business’ Lydia Hu with more. 

Hertz Global Holdings, Inc. declared this week that its future is looking bright as the rental car company emerged from Chapter 11 bankruptcy more than a year since filing to restructure after being pummeled by low demand when the coronavirus pandemic hit.

In a news release on Wednesday, the 103-year-old firm stated that it "has emerged as a financially and operationally stronger company," boasting of more than $5.9 billion in new equity capital thanks to its new group of investors led by Knighthead Capital Management LLC and Certares Management LLC. 

"Faced with the epic and unprecedented challenges presented by the COVID-19 pandemic, and unfazed by early leadership changes, we stayed focused on stabilizing the business and seizing opportunities to mitigate losses and create value for our stakeholders," Hertz's outgoing Board of Directors Chairman Henry Keizer said in a statement. "When the economy began to show signs of recovery earlier this year, we were perfectly positioned to drive a competitive process that would maximize recoveries. The result – paying our nearly $19 billion of creditors in full and returning substantial value to our shareholders – is remarkable."

The company noted that the judge who signed off on their restructuring plan on June 10 stated that the outcome "surpasses any result that I've seen in any Chapter 11 case that I've faced in my 20-plus years."

Hertz – which has traded over-the-counter under the ticker HTZGQ for the past eight months or so after being booted from the New York Stock Exchange in October – began trading over-the-counter under the new ticker HTZZ on Thursday. 

The new stock opened at $22 and took off out of the gate, rallying up to $33.80 – but that was the peak of the day. HTZZ then took a nosedive down to $16.25, before climbing back to finish the day at $26.31.

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Hertz emerges from bankruptcy

CNN 01 July, 2021 - 10:34pm

Updated 11:24 AM ET, Thu July 1, 2021

Rental car company Hertz emerges from bankruptcy, with changes to board

msnNOW 01 July, 2021 - 10:34pm

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The Florida-based rental car company in business for more than 100 years announced its anticipated successful exit from Chapter 11 bankruptcy late Wednesday afternoon. 

In a news release, Hertz Global Holdings, parent of The Hertz Corp., said it had "emerged as a financially and operationally stronger company that is well-positioned for the future." 

Delaware Bankruptcy Judge Mary Walrath, who handled the case, confirmed Hertz's plan of reorganization on June 10, paving the way for its comeback. 

In approving the plan, Walrath described the outcome as "fantastic," saying it surpassed "any result that I've seen in any Chapter 11 case that I've faced in my 20-plus years."

With more than $5.9 billion of new equity provided by a new investor group, Hertz said it has reduced its corporate debt by nearly 80% and "significantly enhanced its liquidity to fund operations and future growth."

The investment group is made up of Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management LP. The trio fought hard for the investment opportunity, beating out another group after a drawn-out bidding war.

With the new infusion of money, Hertz said it has eliminated nearly $5 billion of debt, including all of its European arm's corporate debt.

In addition, Hertz said it has emerged with $2.8 billion in exit credit and $7 billion in asset-backed vehicle financing under terms it describes as "extremely favorable."

The aggregate interest rate on the new vehicle financing is less than 2%.

With its exit, Hertz also announced changes to its board of directors. 

In a statement, Henry Keizer, outgoing board chairman, said: "Faced with the epic and unprecedented challenges presented by the COVID-19 pandemic, and unfazed by early leadership changes, we stayed focused on stabilizing the business and seizing opportunities to mitigate losses and create value for our stakeholders."

As a result of those efforts, shareholders will get a payout, which is highly unusual in a Chapter 11 case. 

"When the economy began to show signs of recovery earlier this year, we were perfectly positioned to drive a competitive process that would maximize recoveries. The result — paying our nearly $19 billion of creditors in full and returning substantial value to our shareholders — is remarkable," Keizer said.

In tandem with its financial restructuring, Hertz said it has undertaken a series of operational steps to create a more focused and profitable enterprise. That includes slashing costs and right-sizing its fleet. 

Another important move in bankruptcy? Hertz sold its Donlen fleet leasing business for $891 million in cash.

Looking ahead, Hertz said it's "on track for strong financial results in 2021," in large part due to a sharp increase in car rentals in the United States, driven by a decline in new COVID cases and rise in vaccinations nationally that has fueled more travel.

In a statement, Paul Stone, Hertz's president and CEO, described the exit from bankruptcy as "a significant milestone in Hertz's 103-year history."

"Through the relentless efforts of our board and team, we are moving forward in an incredibly strong position with an exciting road ahead of us. Now with a solid financial foundation, a leaner, more efficient operating model, and ample liquidity to invest in our business, Hertz has outstanding potential to drive long-term profitable growth," he said.

In the United States and abroad, Stone said, the company is now "poised to capitalize on our industry leadership, deep operational expertise and iconic global brand."

"We look forward to a bright future as a vibrant part of the rebounding travel industry and as a trusted partner for our customers' mobility needs," he said. 

The company's new board will initially include eight members. Another three could be named in the future.

The initial board members include Certares founder Michael Gregory O'Hara as chairman, Knighthead Capital co-founder Thomas Wagner as vice chairman, Certares senior managing director Colin Farmer, Knighthead partner Andrew Shannahan, Apollo partner Christopher Lahoud, and TPG Capital senior adviser and former Ford Motor Co. CEO Mark Fields.

Stone and Vincent Intrieri, CEO and founder of VDA Capital Management LLC, will remain on the board.

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Hertz noteholders seek penalty payments for early debt payoff

Reuters 01 July, 2021 - 02:50pm

(Reuters) - Unsecured noteholders of The Hertz Corp on Thursday made moves to recover around $272 million they say they’re owed after the rental car company paid off its debt early through its bankruptcy proceeding.

The noteholders, represented by Willkie Farr & Gallagher, filed the complaint in Delaware bankruptcy court a day after Hertz emerged from Chapter 11. Hertz, represented by White & Case, and the noteholders agreed during the bankruptcy that they would wait until the reorganization process was completed before asking a judge to rule on the dispute.

The noteholders are in line to receive full recoveries on the $2.7 billion principal debt they’re owed. But they say that Hertz is contractually obligated to pony up penalties for paying off the debt early, thereby depriving them of years of interest payments. After coming off a hugely successful restructuring that resulted in recoveries for shareholders of at least $1 billion, Hertz is more than able to afford these payments, the noteholders argue.

“It would be the height of inequity to demand that the Senior Noteholders provide a thirteen-month interest-free loan to a solvent debtor capable of paying its debts,” the noteholders said in Thursday’s complaint.

They argue that the language in their bond indentures is “virtually identical” to that of noteholders in another large Chapter 11 case in Delaware, Energy Future Holdings. The judge in that case held that the noteholders were not entitled to the redemption payments but was later reversed by the 3rd U.S. Circuit Court of Appeals.

The noteholders said that if they are not granted the redemption payments, they will instead seek around $124.4 million in post-bankruptcy interest.

Though the bankruptcy is now completed, the dispute will still be handled by U.S. Bankruptcy Judge Mary Walrath, who oversaw the Chapter 11 process.

Hertz emerged from bankruptcy on Wednesday after striking a deal with Knighthead Capital Management, Certares Management and Apollo that infuses billions of dollars into the company. The company filed for bankruptcy in May 2020 with nearly $19 billion in debt as the COVID-19 pandemic caused travel demand to collapse. The early weeks of the case were marked by wild stock price activity that prompted the company to try to issue new shares, though that effort was blocked by regulators.

The case is In re The Hertz Corp, U.S. Bankruptcy Court, District of Delaware, No. 20-11218.

For Hertz: Thomas Lauria, Matthew Brown, Chris Shore, David Turetsky and Jason Zakia of White & Case; and Mark Collins, John Knight of Richards Layton & Finger

For the noteholders: Rachel Strickland, Daniel Forman, Agustina Berro and Mark Stancil of Willkie Farr & Gallagher, Edmon Morton, Matthew Lunn and Joseph Mulvihill of Young Conaway Stargatt & Taylor and Harold Kaplan and Mark Hebbeln of Foley & Lardner

Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.

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Hertz Faces Volatile Trading, Bondholder Lawsuit After Leaving Bankruptcy

The Wall Street Journal 01 July, 2021 - 02:31pm

Hertz shares resumed trading Thursday under a new ticker, HTZZ, beginning the session at around $22 before climbing as high as $33.80. They erased most of those gains within the first half-hour of trading and were above $26 a share in afternoon trading.

Thursday’s trading action marks the latest bout of volatility for Hertz, a stock once known as a darling among individual investors who frequented online forums like Reddit’s WallStreetBets. Hertz left chapter 11 on Wednesday, emerging from court protection and naming new directors.

The bankruptcy deal that lifted Hertz out of chapter 11 supplied shareholders with a handsome payout of cash, shares and warrants. Some bondholders bought equity in a bankruptcy rights offering, becoming part-owners of the restructured business. Others that didn’t filed court papers Wednesday demanding premium payments they said they were due.

The lawsuit, filed by Wells Fargo Bank NA on behalf of bondholders it represents, said that Hertz owes make-whole payments—premiums that must be paid under some borrowing arrangements when bonds are retired before their maturity date. Make-whole provisions can be triggered when debt is redeemed or refinanced, requiring that creditors be compensated for the interest they would otherwise have received.

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Hertz Stock Rages On After Bankruptcy With Surge, Then Plunge

Yahoo Finance 01 July, 2021 - 10:22am

The stock, which resumed trading over-the-counter under a new ticker “HTZZ”, bounced between massive gains and losses in the first half-hour of trading Thursday. It opened at $22 and almost immediately surged more than 50% to $35 before reversing direction and tumbling to as low as $16.

Volatility is nothing new for Hertz as the stock has been on a wild ride since the company filed for bankruptcy a year ago and its trading on the New York Stock Exchange was suspended in October.

Many investors are anxious to see when the shares will be listed on a formal stock exchange, which would mean improved access to capital, more liquidity and increased accountability. A Hertz spokeswoman declined to comment on listing plans.

The stock had been trading over-the-counter under the ticker “HTZGQ” for the past eight months as the shares soared from penny-stock status. Hertz shares rallied more than 500% in the first half of 2021 as investors bet on the company’s successful rebound from bankruptcy.

Hertz’s return couldn’t come at a better time. Americans are gearing up to take trips for the July 4 holiday, and the cost of renting cars is at eye-popping levels. The company could be held back by a shortage of available vehicles like the rest of the industry, but there’s plenty of pent-up demand for rentals.

Hertz’s surge over the past year was largely credited to retail investors, who have propelled different pockets of the stock market recently. A group of amateur stock pickers placed numerous risky bets on the company despite it filing for bankruptcy in May 2020, a trend that puzzled Wall Street pros last summer.

The company’s emergence from bankruptcy comes at a time when amateur trading has gone completely mainstream, with Morgan Stanley strategists even suggesting that Wall Street pros follow their smaller peers. Trading in so-called meme stocks is expected to continue gripping the market as corporate executives and investors adjust to the new normal.

A basket of 37 companies whose wild volatility forced Robinhood to impose trading restrictions in January has nearly doubled this year, posting gains that are more than six-times the return of the S&P 500.

More stories like this are available on bloomberg.com

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The car-rental company’s new board will include at least two representatives each from investment firms Certares and Knighthead, which won a bidding war for Hertz.

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Hertz Roller Coaster Resumes in Wild Return After Bankruptcy

BloombergQuint 01 July, 2021 - 10:22am

The stock, which resumed trading over-the-counter under a new ticker “HTZZ”, bounced between massive gains and losses on Thursday before closing up 23% to $26.99. It opened at $22 and almost immediately surged more than 50% to $35 before reversing direction and tumbling to as low as $16, then rising again.

Volatility is nothing new for Hertz as the stock has been on a wild ride since the company filed for bankruptcy a year ago and its trading on the New York Stock Exchange was suspended in October.

Many investors are anxious to see when the shares will be listed on a formal stock exchange, which would mean improved access to capital, more liquidity and increased accountability. A Hertz spokeswoman declined to comment on listing plans.

The stock had been trading over-the-counter under the ticker “HTZGQ” for the past eight months as the shares soared from penny-stock status. Hertz rallied more than 500% in the first half of 2021 as investors bet on the company’s successful rebound from bankruptcy.

Hertz’s return couldn’t come at a better time. Americans are gearing up to take trips for the July 4 holiday, and the cost of renting cars is at eye-popping levels. The company could be held back by a shortage of available vehicles like the rest of the industry, but there’s plenty of pent-up demand for rentals.

Hertz’s surge over the past year was largely credited to retail investors, who have propelled different pockets of the stock market recently. A group of amateur stock pickers placed numerous risky bets on the company despite it filing for bankruptcy in May 2020, a trend that puzzled Wall Street pros last summer.

The company’s emergence from bankruptcy comes at a time when amateur trading has gone completely mainstream, with Morgan Stanley strategists even suggesting that Wall Street pros follow their smaller peers. Trading in so-called meme stocks is expected to continue gripping the market as corporate executives and investors adjust to the new normal.

A basket of 37 companies whose wild volatility forced Robinhood to impose trading restrictions in January has nearly doubled this year, posting gains that are more than six-times the return of the S&P 500.

For bondholders, Hertz’s emergence from bankruptcy wasn’t so simple.

One dispute between noteholders and the company was left unresolved by the reorganization plan that Hertz implemented this week: should the company pay a so-called redemption price for paying off company notes as part of the restructuring.

A trustee for noteholders is demanding about $272 million. A U.S. bankruptcy judge will rule on the issue at a later date.

It's official: Hertz emerges from bankruptcy, with changes to board

News-Press 30 June, 2021 - 05:09pm

In a news release, Hertz Global Holdings, parent of The Hertz Corp., said it had "emerged as a financially and operationally stronger company that is well-positioned for the future." 

Bankruptcy Judge Mary Walrath, who handled the case in Delaware, confirmed Hertz's plan of reorganization on June 10, paving the way for its comeback. 

In approving the plan, Walrath described the outcome as "fantastic," saying it surpassed " any result that I've seen in any Chapter 11 case that I've faced in my 20-plus years."

With more than $5.9 billion of new equity provided by a new investor group, Hertz said it has reduced its corporate debt by nearly 80% and "significantly enhanced its liquidity to fund operations and future growth."

According to Bloomberg, the winning offer valued Hertz at about $7.4 billion, including debt.

Hertz said it has eliminated nearly $5 billion of debt with the new infusion of money, including all of its European arm's corporate debt.

The aggregate interest rate on the new vehicle financing is less than 2%.

With its exit, Hertz also announced changes to its board of directors. 

The company's new board has eight members. Another three could be named in the future.

The initial board members include Certares founder Michael Gregory O'Hara as chairman and Knighthead Capital co-founder Thomas Wagner as vice chairman, along with Certares senior managing director Colin Farmer, Knighthead partner Andrew Shannahan, Apollo partner Christopher Lahoud, and TPG Capital senior adviser and former Ford Motor Co. CEO Mark Fields.

Paul Stone, Hertz's president and CEO, and Vincent Intrieri, CEO and founder of VDA Capital Management LLC, remain on the board.

In a statement, Henry Keizer, outgoing board chairman, said: "Faced with the epic and unprecedented challenges presented by the COVID-19 pandemic, and unfazed by early leadership changes, we stayed focused on stabilizing the business and seizing opportunities to mitigate losses and create value for our stakeholders."

"When the economy began to show signs of recovery earlier this year, we were perfectly positioned to drive a competitive process that would maximize recoveries. The result — paying our nearly $19 billion of creditors in full and returning substantial value to our shareholders — is remarkable," Keizer said.

Another important move in bankruptcy? Hertz sold its Donlen fleet leasing business for $891 million in cash.

In a statement, Stone described the exit from bankruptcy as "a significant milestone in Hertz's 103-year history."

"Through the relentless efforts of our board and team, we are moving forward in an incredibly strong position with an exciting road ahead of us. Now with a solid financial foundation, a leaner, more efficient operating model, and ample liquidity to invest in our business, Hertz has outstanding potential to drive long-term profitable growth," he said.

In the United States and abroad, Stone said, the company is now "poised to capitalize on our industry leadership, deep operational expertise and iconic global brand."

Andrew Hill with Naples-based Andrew Hill Investment Advisors has been highly critical of Hertz but with a "clean new start," he said, the company deserves another look.

"I have started to take a new look despite my negative prior bias," Hill said.

"I will be digging into the company’s financials and strategies soon," Hill said.

Hertz expects to report its second-quarter earnings in mid-August, which will give Hill and other company observers a better view into its turnaround potential.

The former company's shares closed for the last time at $8.74 on Wednesday.

With approval from the bankruptcy judge, Hertz sold $29 million worth of shares last year to raise money and capitalize on the volatility of its stock.

Some feared the amateur investors who bet on Hertz and purchased the new shares in bankruptcy through such apps as Robinhood would lose all their money, but they've fared much better than anyone could have imagined.

On Thursday, shares in the reorganized company opened at $22 on the Over-the-Counter Bulletin Board, designed for smaller companies. Then they yo-yoed.

There are hopes of getting the company's stock listed on a national exchange such as Nasdaq or the New York Stock Exchange again.

Bankruptcy attorney Glenn Moses with Genovese Joblove & Battista in Miami, who has followed the case, said the it could have dragged out much longer if the reorganization plan hadn't treated creditors so well, paying them back in full.

"Ultimately, when you're satisfying creditors' claims in full and returning value to equity in a successful plan, there is less to fight about," he said. "And so, that could be part of the reasons why the case concluded in such a relatively short period of time."

Bloomberg reports that Certares plans further investments to improve the company's technology and customer experience.

In a statement to the global news agency, Greg O’Hara, founder and senior managing director at Certares, said his company has “unique data and insights” from its other travel investments that could help Hertz's management team.

Hertz is being "positioned as a key player in the next generation of mobility,” Knighthead co-founder Tom Wagner shared with Bloomberg.

While some have attributed the outcome of Hertz's bankruptcy case to luck and timing, coinciding with the travel and tourism industry's recovery from the COVID-19 pandemic, others see it differently.

Thomas Lauria, a lead attorney who helped drive Hertz out of bankruptcy, told Bloomberg the restructuring team worked quickly to stabilize the business in the Chapter 11 process so it could capitalize on opportunities as they arose.

“We started paddling like hell," he told a reporter, "so that when the wave came, we were in a position to catch it."

At the time of its Chapter 11 filings last May, Hertz had accrued nearly $20 billion in debt, threatening its survival as it faced a sudden, virtual halt to its business due to COVID.

In May 2013, Hertz announced the relocation of its global headquarters from New Jersey to Estero after the acquisition of the Dollar Thrifty Automotive Group.

The new multimillion-dollar headquarters opened in 2015.

Hertz leaves bankruptcy, a year after the pandemic devastated the car rental business.

The New York Times 30 June, 2021 - 03:54pm

Hertz, an early victim of the pandemic, officially emerged from bankruptcy on Wednesday. Its return coincides with and was made possible in part by a red-hot market for rental cars.

It is a remarkable turnaround for a business that was bloated with debt and struggling to survive just 13 months ago. But a quick economic and travel rebound in recent months set off a bidding war to revive the company, which is more than a hundred years old. The winning group of investors, led by Knighthead Capital Management and Certares Management, provided the company with $5.9 billion in capital.

The resolution of its bankruptcy allows Hertz to shed more than $5 billion in debt, including all of the corporate debt of Hertz Europe. The company also lined up access to nearly $10 billion in loans, credit lines and other debt.

“It sets them up very well,” said Hamzah Mazari, an analyst at Jefferies, an investment bank. By reducing its debt load, Hertz can make much-needed investments like modernizing its technology and buying cars, he said.

Rental car businesses are doing very well right now. Travel is rebounding around the country, and people are eager to rent cars after spending more than a year at home. Searches for rental cars and their prices have nearly doubled over the past two weeks compared with the same period in 2019, according to Kayak.

In some cities, cars can rent for more than $300 a day. Rentals are especially expensive in parts of the country that individuals and families have been flocking to throughout the pandemic: beach and outdoor destinations. In Anchorage, a rental can cost about $330 per day, according to Kayak. In Bozeman, Mont., it can run about $315 a day.

The high prices are partly the result of a car shortage, driven by high demand for used cars and supply chain disruptions throughout the pandemic. On Wednesday, Ford said it would have to keep some production suspended into July because of a global shortage of computer chips.

The skyrocketing prices for used cars helped Hertz in another way.

When the company filed for bankruptcy in May 2020, used car prices were only just starting to rise. By August, prices were up nearly 20 percent, according to data from Manheim, which runs auctions for used cars and tracks that market. The timing worked out well for Hertz, which sold more than 200,000 vehicles, mostly in the second half of 2020. Before it filed for bankruptcy, Hertz had a global fleet of about 650,000 vehicles.

“Instead of a problem, it was actually a source of strength for the rental car companies, including Hertz, last year, because as they sold vehicles they were actually making money on those transactions,” said Jonathan Smoke, chief economist for Cox Automotive, which owns Manheim.

Hertz’s stock, which trades in the less-restricted over-the-counter market, plummeted from more than $15 before the pandemic to less than $2 a share during the crisis. Individual investors, many of whom exchange ideas and trading strategies online, piled into the stock last spring, to the surprise of many analysts who feared the company’s shares could become worthless in bankruptcy. Some of those investors who held on to their shares now stand to make a tidy profit.

Hertz’s share price has risen in the past two months to nearly $9 as Hertz’s emergence from bankruptcy seemed increasingly likely. Starting Thursday, the company’s shares will trade under a new ticker symbol, HTZZ.

“Today marks a significant milestone in Hertz’s 103-year history,” Paul Stone, the company’s president and chief executive, said in a statement. “With a solid financial foundation, a leaner, more efficient operating model, and ample liquidity to invest in our business, Hertz has outstanding potential to drive long-term profitable growth.”

As Hertz Exits Bankruptcy, Reddit Crowd Pockets a Big Score

Yahoo Finance 30 June, 2021 - 02:05pm

As the stock swelled to $5.50 last June, it made no sense to the experts. Regulators stepped in, blocking the car rental company from selling any new shares to gullible investors.

On Wednesday, Hertz will exit bankruptcy. And when it does, the stock may debut at more than double that price -- somewhere around $14, analysts reckon -- just months after the company warned those stockholders that their shares were probably worthless.

The 103-year-old company’s turnaround neatly mirrors the trajectory of the economy as a whole: A violent collapse followed by a spectacular resurgence, aided by a boom in travel as virus cases plunged and by billions in fresh cash from some of the biggest investment houses.

Thomas Lauria, the lawyer who helped lead Hertz into and out of bankruptcy, knows that the chatter among the Wall Street cognoscenti is that he and his team were just lucky to have the deal go as well as it did, that it was simply the result of this confluence of extraordinary events. It isn’t so, Lauria said in an interview last week.

“Luck is something that happens when preparation meets opportunity,” Lauria said, quoting the ancient Roman proverb. The restructuring team stabilized Hertz’s business, putting it in position to capitalize on whatever came along, he said. “We started paddling like hell so that when the wave came, we were in a position to catch it, and we did.”

Ebb tide came on May 26, 2020, just after the start of the Hertz bankruptcy case, when the shares changed hands for as little as 40 cents. By the second week of June, investors were paying $5.53, and Hertz was saying it might wipe them out in the coming financial overhaul.

Instead, the bankruptcy plan that emerged calls for stockholders to get cash and new stock initially valued at about $8 in total, and it’s possibly higher by now. They’re also getting warrants that entitle investors to buy more shares for the next 30 years at a strike price of $13.80 apiece, a potential windfall if the stock breaches that level.

Assuming a volatility of 45% for the new warrants, and using an $8.85 price for the current shares, this implies Hertz’s new stock may trade around the warrants’ strike price of $13.80, according to Phil Brendel, a distressed debt analyst with Bloomberg Intelligence.

The recovery stems in part from Hertz’s status as operator of one of the world’s biggest fleets of vehicles -- about 500,000 as of a year ago -- and thus one of the biggest sellers in the used-car market.

As the pandemic’s grip on the economy tightened, so did the supply of new vehicles, driving up the price of used cars 26% between April and August of 2020. Later, a global semiconductor shortage hurt new car production.

The result: Hertz could ask top dollar for surplus vehicles, and the proceeds helped pay down more debt than anyone originally imagined. By early this year, Hertz’s prospects looked a lot rosier, and some of Wall Street’s most aggressive investment firms that deal with troubled companies started paying attention.

Then, while they were crunching the numbers, came the biggest game-changing financial development of all: People began making summer vacation plans.

“What really struck a chord with me was when I started to feel a burning desire to travel,” said Andrew Glenn, who represented shareholders in the Hertz bankruptcy. “We’re all accustomed to working remotely, but we’re all prisoners of our own environment in need of an escape.”

On one side was Knighthead Capital Management and Certares Management, which teamed up with Apollo Global Management Inc. On the other was a consortium led by Centerbridge Partners, Dundon Capital Partners and Warburg Pincus.

Each group submitted multiple rounds of offers to buy the bankrupt company, dangling sweeteners like full recoveries for debt holders and some cash or warrants for shareholders. The competition increased the value of the company and payout to both groups, a concept nearly unthinkable when the pandemic shutdowns sent Hertz’s revenue to near zero.

On May 10 of this year, the competing parties convened at Lauria’s White & Case law offices in Miami for a formal auction. They worked around the clock from 10 a.m. on Monday until Tuesday night. Some participants didn’t have the chance to check into their hotel rooms.

“We just kept feeding people to keep the competition going,” Lauria recalls. “There was a momentum and energy around the process that would be lost if we sent everyone home.”

Knighthead and Certares came out on top with a plan valuing Hertz at around $7.4 billion including debt that made bondholders whole and gave stockholders their recovery package. It’s an astounding outcome not just for the high value the equity holders received, but because it’s so rare for them to get anything at all in a bankruptcy.

Certares is planning investments to improve Hertz’s technology and customer experience, Greg O’Hara, founder and senior managing director at Certares, said in a statement. Certares has “unique data and insights” from its other travel investments that it can use to assist the car renter’s management team going forward, he said.

Hertz has been “an important player in traditional mobility for decades and is being positioned as a key player in the next generation of mobility,” Knighthead co-founder Tom Wagner added.

“What’s remarkable was not the first seven months of the Hertz case but the last three months -- how fast this happened,” Glenn said.

So now the company is leaving court oversight just as a surge in summer road trips begins. The July 4 holiday will be the second-busiest on record, with 47.7 million Americans expected to travel, according to the AAA automobile club.

Hertz’s newest problems may include a shortage of cars to rebuild its fleet, but meanwhile it’s raking in the revenue. Renting a small SUV from Hertz for the long weekend at the airports for the top three destinations on AAA’s list -- Orlando, Florida, Denver and Anaheim, California -- would cost between $530 and $1,030, far more than a typical monthly lease payment.

Lauria, for his part, will be celebrating the occasion with a vacation to Greece that sidesteps the rental car shortage. He’s going island hopping -- no Hertz car needed.

(Updates with comments from Certares and Knighthead in paragraphs 20 and 21.)

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