Hertz leaves chapter, a yr after the pandemic devastated the automobile rental enterprise.


Hertz, an early victim of the pandemic, officially emerged from bankruptcy on Wednesday. His return coincides with and was made possible in part by a glowing rental car market.

It’s a remarkable turnaround for a company that was bloated with debt just 13 months ago and struggling to survive. But a rapid recovery in the economy and tourism in recent months sparked a bidding war to revive the more than a hundred-year-old company. The winning group of investors, led by Knighthead Capital Management and Certares Management, provided the company with $ 5.9 billion in capital.

The bankruptcy resolution allows Hertz to reduce more than $ 5 billion in debt, including all of Hertz Europe’s corporate debt. The company has also gained access to nearly $ 10 billion in loans, lines of credit, and other debt.

“It portrays them very well,” said Hamzah Mazari, an analyst at Jefferies, an investment bank. By reducing the debt burden, Hertz can make much-needed investments like upgrading its technology and buying cars, he said.

The car rental companies are doing very well at the moment. Travel is recovering across the country and people are eager to rent cars after spending more than a year at home. According to Kayak, searches for rental cars and their prices have almost doubled in the past two weeks compared to the same period in 2019.

In some cities, cars can be rented for more than $ 300 a day. Rentals are especially expensive in parts of the country that individuals and families have flocked to during the pandemic: beach and outdoor destinations. In Anchorage, a kayak rental can cost around $ 330 per day, according to the kayak. In Bozeman, Mont., It can cost about $ 315 a day.

The high prices are due in part to a car shortage caused by high demand for used vehicles and disruptions in the supply chain during the pandemic. On Wednesday, Ford said that due to a global shortage of computer chips, it will have to suspend part of production by July.

The skyrocketing used car prices helped Hertz in other ways.

When the company filed for bankruptcy in May 2020, used car prices were just beginning to rise. By August, prices rose nearly 20 percent, according to Manheim, which runs auctions for used cars and tracks that market. The timing was right for Hertz, which sold more than 200,000 vehicles, especially in the second half of 2020. Before filing for bankruptcy, Hertz had a worldwide fleet of around 650,000 vehicles.

“Instead of a problem, it was actually a source of strength for car rental companies, including Hertz, last year because when they were selling vehicles they were actually making money on those transactions,” said Jonathan Smoke, chief economist at Cox Automotive. that belongs to Manheim.

Hertz stock, which trades on the less constrained over-the-counter market, plunged from more than $ 15 per share to less than $ 2 per share during the pre-pandemic crisis. Individual investors, many of whom share ideas and trading strategies online, piled into the stock last spring, to the surprise of many analysts who feared the company’s stock could become worthless in bankruptcy. Some of the investors who stuck with their stocks can now make a decent profit.

Hertz’s share price has soared to nearly $ 9 in the past two months as Hertz’s exit from bankruptcy became more likely. As of Thursday, the company’s shares will be traded under the new ticker symbol HTZZ.

“Today marks a significant milestone in Hertz’s 103-year history,” said Paul Stone, the company’s president and CEO, in a statement. “With a solid financial foundation, a leaner, more efficient operating model, and sufficient liquidity to invest in our business, Hertz has great potential to drive profitable long-term growth.”