Shares of bankrupt car rental company Hertz Global (HTZ) - Get Hertz Global Holdings, Inc. Report fell Tuesday after the company announced it was seeking debtor-in-possession financing after its share sale plan failed.
The company said that it was looking for new sources of cash amid a downturn in the travel business after raising just $29 million from its plan to sell stocks.
The plan was for the company to offer as much as $500 million in stock.
Hertz shares were down nearly 2% to $1.65 Tuesday.
The company previously had stated that it wanted to avoid raising money while it negotiated its debt load in bankruptcy court, but the deterioration of the travel industry and uncertainty about its future due to the coronavirus pandemic has forced its hand.
In June, the company paused its share sale plan pending a review by the Securities and Exchange Commission after it said in a public filing the shares "could ultimately be worthless."
Hertz reported a 67% decline in second-quarter revenue, leading to a loss of $847 million in the trailing three months.
Despite the rough quarter, the company said it has $1.4 billion in cash on hand that it can use, however its ability to finance operations requires a recovery in demand in key markets as well as an extension from creditors of waivers on payments for its cars in continental Europe and the U.K., according to Monday's filing.
Hertz needs an extension beyond Sept. 30 to avoid having to make payments on its European fleet.
Hertz plans to shrink its U.S. fleet by at least another 182,000 vehicles, after selling 100,000 off in June and July, in order to pay U.S. securities holders $108 million a month from July until the end of the year.