Reorganization provides full payout to US$19 billion in debt and claims, and returns more than US$1 billion in value to shareholders
Company well positioned for future competition and growth with only US$1.5 billion in corporate debt and materially enhanced global liquidity
Global law firm White & Case LLP has advised Hertz Global Holdings Inc. on its successful financial restructuring after the rental car company filed for chapter 11 protection in May 2020 in response to the disastrous impact of the COVID-19 pandemic on its business.
The company officially emerged from bankruptcy today, following the confirmation of the company's reorganization plan on June 10 by the Delaware Bankruptcy Court that presided over the case. In doing so, Judge Mary Walrath described the plan as a "fantastic result" that "surpasses any result I've seen in any chapter 11 case that I've faced in my 20-plus years."
"Our team has successfully guided Hertz through one of the largest and most complex restructurings of all time," said Thomas Lauria, Global Head of White & Case's Global Financial Restructuring and Insolvency Practice. "When the company entered bankruptcy, its revenues had been reduced by 90 percent year-over-year and it faced a US$19 billion mountain of debt, including about US$10 billion of ABS financing for its US vehicle fleet, US$5 billion of US corporate debt and US$4 billion of other obligations around the world. Our global footprint and ability to deliver coordinated cross-disciplinary expertise, including restructuring, litigation, bank finance, high yield, securitization and M&A, put us in a unique position to assist the company in navigating its way to achieving a truly extraordinary turnaround in just over a year," Lauria further stated. "We are extremely proud of this remarkable outcome. The success of Hertz is a testament to our team's unmatched commitment to solving difficult problems through innovation, dedication and good old-fashioned hard work."
Under the Hertz reorganization plan, new investors have provided about US$5.9 billion of new equity capital and the company has raised about US$2.8 billion of new corporate financing on favorable terms, including an undrawn US$1.25 billion revolver, and successfully placed US$7 billion of new ABS financing with an all-in yield of less than 2 percent. The transaction results in a materially strengthened business, providing the company with the global liquidity needed to fuel its future growth, while reducing corporate debt by about US$5 billion. All creditors are being paid in cash, in full, and shareholders are receiving cash, stock and warrants valued at US$7 to US$8 per share.
The White & Case team was led by partner Thomas Lauria in Miami, and included partners Gregory Pryor, Adam Cieply, David Thatch, Chris Shore, Eric Leicht, David Bilkis, David Johansen, David Dreier, David Turetsky, Andrew Zatz and Elizabeth Devine, and Henrik Patel and counsel Kenneth Barr and associates Andrea Amulic, Caitlin Colesanti, Steven Schwartz, Sam Hershey, Kathryn Sutherland-Smith, Erin Smith, Kathrin Schwesinger and Livy Mezei (all in New York); partner Matthew Brown, counsel Fan He and associates Eitan Goldberg, Cecilia Walker and Gregory Warren (all in Miami); partner Jason Zakia and counsel Laura Baccash (both in Chicago); partners Roberto Kampfner, Ronald Gorsich and Brenda Dieck, and associates Aaron Colodny, Andrew Mackintosh, Doah Kim and RJ Szuba (all in Los Angeles); partner A.J. Ericksen and associate Hannah Craft (both in Houston); and partners Ian Wallace, James Greene, Morvyn Radlow and Tom Falkus and associates Sunaina Deol, Ellen Campbell and Suzanne Thomson (all in London).
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