Hertz, ABS Lenders Reach $650 Million Deal Over Fleet Reduction
- Hertz (NYSE:HTZ) reached a deal with its asset-backed security (ABS) lenders over its fleet reduction plan, the Wall Street Journal (WSJ) reported.
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- Under the tentative deal, Hertz will dispose of more than 182,500 leased vehicles, maintaining 310,000, by year end. It will be able to keep $900 of the proceeds from each vehicle sold.
- The ABS lenders have opposed a fleet-reduction plan because the master lease prohibits Hertz from treating its fleet as if it operated under multiple leases.
- Hertz will make $650 million in lease payments through year-end to its creditors. A person familiar with the matter told the WSJ that the payments are about half of what the car rental company is contractually obligated to make.
- The person added that Hertz is trying to secure up to $2 billion in financing to get through the bankruptcy process.
- The settlement also offers a way for Hertz to repurchase or lease as many as 40,000 vehicles from the lenders group.
- Yesterday, InvestorPlace contributor David Moadel cited as “spin” the bankrupt company’s strategy to reduce “planned fleet levels through vehicle sales and by canceling fleet orders.” He advised that “A clear-headed look at Hertz stock strongly suggests that the company not only won’t be saved, but isn’t even worth saving.”
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