Hertz Global Holding Inc. was going through bankruptcy at the beginning of this year 2021, and now that they have stabilized to some extent, they have decided to pay for the equity. Car-rental company Apollo Global Management Inc. had invested in Hertz Global Holdings Inc too and is now looking forward to getting its investment share of around three hundred and seventy-five million dollars as soon as Hertz Global Holdings Inc sells off its bond on November 18 on Monday.
The long-term Apollo Global Management Inc investment was delayed for its repayment by Hertz Global Holding Inc, but now that they have sold the bond, Apollo will be getting back its share of investment in the form of a huge amount than they initially invested.
The bond sold by Hertz Inc is worth one point five billion dollars which is quite high, and they have decided to use this amount to purchase off A preferred stock shares that are of their own company series called the Hertz’s Series. Hertz Global Holdings Inc stated on Wednesday, November 17, that they would either buy the whole of these or just a portion for an amount of two hundred and fifty million dollars. They will be repurchasing all the remaining for any of the corporate purposes.
It was reported on Wednesday that The one point five billion dollars worth of preferred stocks that Hertz Global Holding Inc has decided to buy is sold off by Apollo Global Mnaagement Inc in order to help Hertz with the bankruptcy it has just gotten pout from.
The repurchase will cost Hertz Global Holding Inc one hundred and twenty-five cents each, or a total amount of 1.875 billion dollars, to be precise. Bloomberg reported this with the help of the real documents of the deal that were seen, and that makes it authentic. Apollo Global Management Inc and the other companies that are selling their stocks on Hertz Inc. will be in a huge favor through this deal. So this deal is a piece of good news for both parties and other companies who had invested in Hertz Global Holding Inc.
This deal of repurchases is led by the company Barclays Plc, but when interviewed, they have declined to talk about it. Not just them, but the Hertz Global Holding Inc and Apollo Global Management Inc’s representatives have also declined to respond at first, but later they did let out some information to the media.
Jody Lurie, who is an intelligence analyst, made some analysis and reported them, stating that the decision to repay the preferred notes is good as it will help to decline the coupon debt as it had gotten really high. So it is necessary to eliminate this debt first. After two years, the preferred percentage declines to about seven percentage points. It is two percent less than the nine percent of dividend that it initially had.
Or After then years, it would be twenty-three percentage points lower than the initial nine percentage points of paying in. So ten years out, it would be much higher than it is now. A total of about fourteen percentage points increase will be seen.
Through different sources, it was concluded that the final deal that they locked consisted of a lower than the initial deal. It is now for five years out with a percentage of 4.625 precisely along with the percentage of about five percentage points that will be for an eight-year duration.
The bond Hertz Global Holding inc sold consisted of several parts that were sold off to different investors. These parts had different prices according to the duration. For the five years duration debt, the bond would be worth five hundred million dollars each part; The company has decided to change the price of each part of the bond into five hundred million dollars each from the initial value of about seven hundred and fifty million dollars each. For the next eight years, the bond price would be one billion dollars for each part.
There were other conditions limiting Hertz Global Holding inc from buying the bond again. These were that the company would not be able to purchase it back again before the next three years at least.
B2 and B3 ratings were given to Hertz Global Holding Inc by the S&P Global and Moody’s Investors Service when the news of this deal was spread or was made public. This is because this deal is really a good step taken by Hertz, and it will be drawing the preferred equity.
When Hertz Global Holding Inc had met with an unexpected bankruptcy, everything was stirring as there was a clash for taking charge of the company. But the company was successfully taken out of bankruptcy which was of Chapter eleven by the Certares Management and the Knighthead Capital Management group.
Hertz is in the process of cleaning up its balance sheet after relisting on Nasdaq earlier this month, where the company raised $1.3 billion. The company tapped the leveraged loan market in June for about $1.6 billion to help fund its reorganization plan. Last year, Hertz received a bankruptcy loan from funds including Apollo.
Hertz, back in the middle of this year, 2021, took out the loan from the market of about one point six billion dollars in order to carry out its plan of reorganization of the company. Last year in 2020 too Hertz took loans to fight its bankruptcy, and these loans were taken from Apollo Global Management Inc. On the Nasdaq, which is the biggest stock exchange, Hertz is trying to cover up for its previous losses, and for that reason, it actually rose to an amount of one point three billion dollars.