Hertz rolls out of bankruptcy as pandemic begins to fade
More than a year after the coronavirus (COVID-19) pandemic devastated his business, Hertz emerged from bankruptcy under a new owner and with a new board of directors.
As part of the bankruptcy deal, Knighthead Management, Certares Capital Management and its co-investors are buying the bulk of Hertz’s equity for approximately $ 2.8 billion. Shareholders and bondholders backed an approximately $ 1.6 billion stock rights offer, while Apollo purchases $ 1.5 billion of preferred shares.
The newly reorganized car rental company comes out of bankruptcy with much less debt. It has raised more than $ 5.9 billion from its new investors and has seen its stock exceed its fundamental value, thanks to organized retail traders on Reddit. As a result, Hertz says it has reduced its corporate debt by nearly 80% and significantly improved its liquidity to fund operations and future growth.
“In the face of the epic and unprecedented challenges presented by the COVID-19 pandemic, and unfazed by the first changes in leadership, we have remained focused on stabilizing the business and seizing opportunities to mitigate losses and create new value to our stakeholders, ”said Henry Keizer, outgoing Chairman of the Board of Hertz.
Implement best practices
As part of its redesigned operations, Hertz affirms its intention to streamline operations and improve the customer experience. It will use technology to “optimize demand forecasting” to better manage its fleet of vehicles.
The company also plans to adopt other technologies to make the rental process easier, including launching an app that allows customers to check in without queuing.
When the pandemic struck at the end of March 2020, the travel industry came to a screeching halt, along with the rest of the economy. Hertz was the hardest-hit car rental company and filed for bankruptcy two months later.
As the pandemic continues to subside and Americans begin to travel again, Hertz and other car rental companies face new challenges: having enough cars to meet demand. Due to the shortage of new and late used cars, some consumers have been turned away from the car rental counter.
The Wall Street Journal reports that the shortage of rental cars is particularly severe in popular tourist destinations like Hawaii. With all cars booked well in advance, some visitors to the islands have resorted to personal vehicle rentals from locals.