Hertz files plan of reorganization that includes up to $4.2 billion investment by Knighthead and Certares

Hertz Global Holdings Inc.
on Tuesday filed a plan of reorganization with the U.S. Bankruptcy Court for the District of Delaware and said it expects to emerge from Chapter 11 bankruptcy by early to mid summer. The plan provides for Knighthead Capital Management LLC and its affiliates and Certares Opportunities LLC and its affiliates to sponsor the plan and invest up to $4.2 billion to purchase up to 100% of the new company. “This proposed investment, if consummated, will, together with a new $1 billion first-lien financing, a new $1.5 billion revolving credit facility, and a new asset-backed securitization facility to finance Hertz’s U.S. vehicle fleet, provide the basis for the proposed Plan and the funding needed for Hertz to complete its financial restructuring and emerge from Chapter 11 in early to mid summer,” the car rental company said in a statement. The plan would “substantially” reduce Hertz’s debt and provide for a less leveraged vehicle debt structure, said the statement. It would provide for payment in cash in full of all of the company’s first- and second-lien debt and all administrative and priority claims, including the money owed under a $1.65 billion debtor-in-possession facility. The plan must now be approved by the court at a hearing scheduled for April 16. Knighthead and Certares recently created the CK Opportunities Fund, a co-managed vehicle that will invest in travel and leisure. Hertz shares were not active premarket, but have fallen 87% in the last 12 months, while the S&P 500
has gained 26%.