Hertz Global (HTZ) - Get Report was plunging Tuesday after the biggest U.S. rental car company announced a deal with creditors that eases its debt burden, staving off the imminent threat of bankruptcy.
“On May 4, Hertz entered into forbearances and limited waivers with certain of the company’s corporate lenders and holders of the company’s asset-backed vehicle debt,” the company said in a filing with the Securities and Exchange Commission.
“The forbearances and waivers provide Hertz with additional time through May 22 to engage in discussions with its key stakeholders with the goal to develop a financing strategy and structure that better reflects the economic impact of the Covid-19 global pandemic and Hertz’ ongoing operating and financing requirements,” the company said.
The pandemic has hammered the company, as would-be travelers stay at home. “While Hertz has taken aggressive action to eliminate costs, it faces significant ongoing operating expenses,” including monthly lease and servicing payments, the company said.
Hertz discussed with creditors how to escape its financial predicament without resorting to bankruptcy, knowledgeable sources told Bloomberg. But it was ready to file for bankruptcy if necessary, they said.
Hertz, which missed a lease payment last week, hired FTI Consulting to advise it on efforts to streamline operations in advance of a possible chapter 11 filing, knowledgeable sources told The Wall Street Journal. The missed lease payment set off a grace period that would have expired Monday.
Hertz shares recently traded at $3.11, down 13.3%. The stock has plunged 78% over the last three months.