- Car-rental company Hertz Global received a revised proposal to fund its exit from Chapter 11 bankruptcy.
- New Jersey-based Avis Budget reported a net loss for the first quarter of 2021.
Car-rental companies Avis Budget Group, Inc. (NASDAQ: CAR) and Hertz Global Holdings Inc. (OTCPK: HTZGQ), which saw their stock price double year to date, tumbled on Tuesday’s trading.
Both the companies’ stocks have staged a stellar performance this year. Avis Budget shares are up around 120 per cent and Hertz managed to gain 100 percent year to date.
However, New Jersey-based Avis Budget’s share price dropped as much as 7 percent on Tuesday while Hertz’s stock plummeted 20 percent.
The Florida-based company’s shares fell after the company said it received a revised proposal from affiliates of Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management LP to fund its exit from Chapter 11 bankruptcy.
The companies have proposed to fund Hertz's reorganization plan through US$2.8 billion in direct common stock investments, direct preferred stock financing of US$1.5 billion and a rights offering to raise US$1.36 billion.
The offer also proposes to pay in full of all secured and unsecured funded debt. In addition, it will provide 50 cents cash to common stockholders and either 10-year warrants of a total 10% of the reorganized company or the chance to participate in the rights offering.
Reports say that the latest offer gives Hertz an enterprise value of more than US$6.2 billion.
In the earlier deal during March, Knighthead and Certares proposed to invest up to US$4.2 billion to buy a majority stake in Hertz. However, Hertz in April said it selected a proposal from Centerbridge Partners, L.P., Warburg Pincus LLC, and Dundon Capital Partners, LLC, which outbid Knighthead’s earlier proposal.
Hertz said it would evaluate Knighthead’s revised offer and its board is yet to decide on the offer.
Avis Budget Group, Inc.
Avis Budget reported its results for the first quarter of 2021 after the market close on Monday.
The company posted a 22 percent year-over-year decline in its revenue during the three months ended March 31 to US$1.37 billion. Revenue dropped 41 percent in its international business while it decreased 14 percent in the Americas.
Net loss during the quarter totaled US$170 million, US$2.43 per share, compared with a net loss of US$158 million, or US$2.16 per share in the year-ago period.
Adjusted net loss narrowed to US$32 million, or 46 cents per share, from US$103 million, or US$1.40 per share in first quarter of 2020.
Meanwhile, Avis refrained from providing any outlook, citing volatility associated with the sector.