Hertz Global Holdings Inc. is requesting a bankruptcy judge to allow it to take advantage of the impulsive rally in its stock by unloading new shares to the tune of up to $1 billion.
Based on a court filing, stocks of bankrupt firms are usually wiped out, but after a massive two-week climb, the car rental company is preparing to sell up to 246.78 million common shares with support from Jefferies LLC. Judge Mary Walrath scheduled a Friday hearing for consideration of the proposal.
Investors are bidding Hertz and other bankrupt firms on hopes that the economy, and especially air travel, will rebound. Earlier this week, Hertz's stock rose to $5.53, a nearly 10-fold increase compared to its closing price of 56 cents after the company's May 22 bankruptcy filing.
Meanwhile, Hertz reported on Wednesday that it received a Notice of Delisting from the New York Stock Exchange on May 26, citing the bankruptcy filing made by the car rental firm on May 22. Hertz disclosed that the delisting had been appealed and requested a court date. Until the appeal is resolved the company's stock will remain listed on NYSE.
In a statement, and as reported by Tomi Kilgore of MarketWatch, there is no guarantee that NYSE "will grant the company's request for continued listing during the hearing and whether there will be equity value in Hertz' common stock."
Hertz based its court request on an almost 10-fold increase in its stock from 56 cents on May 26 to $5.53 on Monday, the filing showed. Although the stock has slipped to less than half that level, Hertz said that a sale of its unissued shares could still help cover its debts.
The recent market prices and volumes of trading in the common stock of the company potentially offer debtors a great chance to hike their capital capital on far better conditions to any debtor in possession financing, the company disclosed.
A share sale would prevent additional interest, costs and restrictions on Hertz's finances, and would not place any demands from a bankruptcy loan that would outstrip current creditors, the firm stated.
At current market prices, the company's stock was able to retrace 60.6 percent of its post-bankruptcy climb through Monday. Hertz disclosed in an 8-K that on June 5, chief marketing officer Jodi Allen was terminated without cause. Allen had been CMO since October 2017. Hertz did not issue any other reason for Allen's termination.
