Hertz Global Holdings HTZGQ was soaring Wednesday after the battered car rental giant said it had selected Knighthead Capital Management, Certares Management, and Apollo Capital Management to buy the company out of Chapter 11,
Shares of the Estero, Florida company rose nearly 55% to $5.71.
The proposal would eliminate about $5 billion of corporate debt, including the complete elimination of all corporate debt on Hertz's European business, Hertz said, and provide the company with over $2.2 billion of global liquidity.
Hertz said its Chapter 11 plan will be funded through investments from the KHCA Group and co-investors aggregating $2.78 billion, the issuance of $1.5 billion of new preferred stock to Apollo, and an offering to existing shareholders to buy $1.64 billion of additional common stock.
The plan "would deliver significant value" existing shareholders including, Hertz said, including $239 million in cash and stock representing 3% of the shares of the reorganized company.
Hertz said it is continuing work toward exiting Chapter 11 by June 30.
The deal, which gives a reorganized Hertz an enterprise value of $7.43 billion, followed "a robust competition" between the Knighthead Capital group and a group led by Centerbridge Partners, Warburg Pincus and Dundon Capital Partners, Hertz said
The Knighthead-Certares plan provides for a distribution estimated at close to $8 a share to the company’s current stockholders, according to the Wall Street Journal.
"We are well-positioned to take advantage of increasing global travel demand and new long-term growth opportunities," Paul Stone, president and CEO said in a statement.
Hertz declared filed for bankruptcy protection in May 2020 as the collapse in the global travel industry caused by the COVID-19 pandemic overwhelmed its ability to reach long-term agreements with creditors on reduced payments.
Four days after filing for bankruptcy Hertz said it received a delisting notice from the New York Stock Exchange.
Robinhood investors swarmed in to buy shares of the beleaguered company at a cheap price.
In October, Hertz said its common stock would start trading exclusively on the over-the-counter market after the bankruptcy filing.
The company said that stock quotations will be available on the OTC Bulletin Board, or pink sheets, under the ticker symbol HTZGQ.
Judge Mary Walrath must approve the final plan in Delaware bankruptcy court.
Last week, Hertz announced first-quarter revenue of $1.3 billion, down 32% from a year ago. Net income was $190 million. On an adjusted basis, Hertz lost 33 cents a share, or $52 million.