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Hertz in Talks for Bankruptcy Loan After Shelving Stock Sale

Hertz is discussing obtaining a bankruptcy loan to fund its reorganization, a media report says.
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Hertz Global Holdings  (HTZ) - Get Hertz Global Holdings Inc Report is reportedly in talks for a bankruptcy loan to fund its business reorganization after the auto rental company suspended a sale of potentially worthless stock.

Hertz had put a planned $500 million stock sale on hold pending a review by the Securities and Exchange Commission after it said in a public filing the shares "could ultimately be worthless."

With the stock deal shelved for now, Hertz is in discussions with top lenders to supply a financing package, The Wall Street Journal reported, citing people familiar with the matter. The bankruptcy loan could approach $1 billion.

Hertz, which has been hit hard by the coronavirus pandemic shutdown, filed with the SEC to sell $500 million of stock on earlier this week. On Wednesday SEC Chairman Jay Clayton told CNBC that the commission had "comments" about the controversial sale.

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“In this particular situation we have let the company know that we have comments on their disclosure,” Clayton said. “In most cases when you let a company know that the SEC has comments on their disclosure, they do not go forward until those comments are resolved.”

Last week, Judge Mary Walrath of the U.S. Bankruptcy Court in Delaware said that Hertz, which filed for Chapter 11 protection on May 22 with nearly $20 billion in debts, could raise as much as $1 billion through the sale of new shares.

Hertz told the court it would alert buyers of the new shares that common stock in the company "could ultimately be worthless” once its bankruptcy proceedings are concluded. 

The company received a delisting notice from the New York Stock Exchange on May 26.

Hertz did not immediately respond to a request for comment.