ESTERO, Fla. - Hertz Global Holdings (OTC:HTZGQ), Inc. (NASDAQ: HTZ), a prominent player in the global car rental market, has announced its plan to issue an additional $500 million in senior secured notes. The offering, which is contingent on market conditions, will be conducted by its subsidiary, The Hertz Corporation. According to InvestingPro data, Hertz currently operates with a substantial total debt of $19 billion and a concerning debt-to-equity ratio of 27.9x, highlighting the significance of this new issuance.
The notes, carrying an interest rate of 12.625% and maturing in 2029, are an additional issuance to the existing notes put forth on June 28, 2024. This move will increase the total outstanding principal amount for this series of notes to $1.25 billion. InvestingPro analysis indicates that Hertz may face challenges with interest payments, as reflected in its negative EBITDA of -$1.09 billion in the last twelve months and rapid cash burn rate.
Hertz Corporation's strategy for the net proceeds involves repaying outstanding borrowings under its revolving credit facility. Additionally, the funds will cover consent fees and other expenses related to the amendment of terms for both the notes in question and the company's 8.000% Exchangeable Senior Second-Lien PIK Notes due the same year.
These secured notes will be backed by Hertz Global Holdings and other subsidiaries, aligning with the collateral that secures the company's first lien credit facilities. The offering targets qualified institutional buyers and non-U.S. persons in compliance with the Securities Act of 1933, as amended.
This financial maneuver is not available to the general public, as the notes and their guarantees will not be registered under the Securities Act or any state securities laws. Consequently, they cannot be offered or sold within the United States without registration or an exemption from registration requirements.
The information disclosed is based on a press release statement from Hertz Global Holdings, Inc. It is important to note that the company's forward-looking statements, such as expectations and intentions regarding the offering, are subject to various risks and uncertainties, which may affect the completion and terms of the offering. With an Altman Z-Score of 0.16 indicating financial distress, investors seeking deeper insights into Hertz's financial health can access comprehensive analysis and 13 additional ProTips through InvestingPro's detailed research reports.
In other recent news, Hertz Global Holdings Inc . reported its Q3 2024 results, highlighting a strategic turnaround plan amid market challenges. The company reported Q3 revenue of $2.6 billion but faced an adjusted EBITDA loss of $157 million, largely due to a noncash asset impairment charge exceeding $1 billion. CEO Gil West outlined a strategy focused on fleet management and cost optimization, aiming to achieve operational excellence by 2025.
Hertz is targeting a depreciation per unit below $300 and a daily operating expense per transaction day in the low $30s by 2025. The company has partnered with Palantir (NASDAQ:PLTR) for fleet management enhancement and is working towards improving financial metrics and long-term growth.
Despite ongoing litigation related to bankruptcy claims and a 4% year-over-year decrease in transaction days, Hertz remains optimistic about its future. These are among the recent developments that investors should take note of.
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