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Hertz Global Holdings, Inc. (NASDAQ: HTZ), a leading global rental car company, has announced that its wholly-owned subsidiary, The Hertz Corporation (Hertz Corp.), has entered into agreements to sell $750 million in aggregate principal amount of 12.625% First Lien Senior Secured Notes due 2029. This represents an increase from the initially planned $500 million. Additionally, Hertz Corp. will offer $250 million in aggregate principal amount of 8.000% Exchangeable Senior Second-Lien Secured PIK Notes due 2029. These private offerings are exempt from the registration requirements of the Securities Act of 1933. The transactions are expected to close around June 28, 2024, pending customary closing conditions.
Use of Proceeds
Hertz Corp. plans to use the net proceeds from these offerings to reduce a portion of its $2.0 billion committed revolving credit facility. This strategic move aims to improve the company’s liquidity. Notably, the revolving credit facility will remain available after the paydown, with total commitments under the facility remaining unchanged.
Terms and Conditions
The First Lien Notes will be issued at an annual interest rate of 12.625% and it will be payable semi-annually in cash on January 15 and July 15, beginning January 15, 2025, and maturing on July 15, 2029.
The Exchangeable Notes will bear PIK interest at a rate of 8.000% per year, also payable semi-annually on January 15 and July 15, beginning January 15, 2025. They will mature on July 15, 2029, unless repurchased, redeemed, or exchanged earlier. The exchange rate for these notes is initially set at 150.9388 shares of common stock per $1,000 principal amount, equating to an initial exchange price of approximately $6.6252 per share. This price represents a premium of about 89% to the $3.51 closing price of Hertz’s common stock on June 20, 2024. The Exchangeable Notes will be exchangeable under certain conditions until April 15, 2029, and at any time thereafter until two trading days before maturity, into cash, shares of common stock, or a combination thereof, at Hertz Corp.'s discretion.
Company Background
A subsidiary of Hertz Global Holdings, Inc., The Hertz Corporation operates the Hertz, Dollar, and Thrifty vehicle rental brands. With operations spanning North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia, and New Zealand, Hertz is one of the largest vehicle rental companies worldwide. The Hertz brand is highly recognized globally, underscoring the company’s extensive reach and strong market presence.
