Hertz sees signs of turnaround as it approaches exit from bankruptcy – News-Press

Hertz, whose car-rental bands also include Dollar and Thrifty, lost almost all their revenue when travel shut down due to the coronavirus this year. Wochit

Hertz saw its business strengthen in the first quarter, as it put the gas pedal on efforts to exit bankruptcy.

On Friday, Estero-based Hertz Global Holdings parent of The HertzCorp. reported quarterly profits of $190 million, or $1.21 a diluted share.

That compared to losses of $356 million, or $2.50 a share, a year ago.

Adjusting for one-time expenses and gains, Hertz said it lost $52 million, or 33 cents a share.

Revenues totaled nearly $1.3 billion in the quarter ending March 31. That was down from but much closer to the $1.9 billion Hertz reported forthe same monthslast year whenthe financial blow from thepandemic hadonly justbegun to show up on its bottom line.

For comparison, the company had revenue of $2.1 billion in the first quarter of 2019.

Latest: Hertz deems competing bid for its reorganization plan 'superior'

In case you missed it: Judge makes milestone decisions in Hertz's bankruptcy case

Previously: Hertz switches gears, chooses new sponsors to emerge from bankruptcy in June

An aerial view of Hertz's global headquarters in Estero.(Photo: USA TODAY NETWORK - FLORIDA FILE PHOTO/Dorothy Edwards)

Hertz hasimproved upon its financial results from last year by cutting costs, so that they're better aligned with demand.

Over the past few months, Hertz's business has also improved markedly, as more Americans get vaccinated, making them more comfortable with travel, at least within the United States.

"This quarter we realized the first effects of the leisure travel rebound and capitalized on strong demand-driven pricing in destination markets that exceeded 2019 levels," saidPaul Stone,HertzGlobal's president and CEO, in a statement. "We're continuing to see improved demand and are optimistic about a sustained recovery."

Autoplay

Show Thumbnails

Show Captions

With that optimism, Hertz is working aggressively to replenish its fleet, "despite the constraints of the global semiconductor shortage and its impact on the automotive supply chain," Stone said.

"Most importantly, I'm exceptionally proud of our employees who are working tirelessly to serve our customers as they're ready to be on the road again," he said.

Hertzunloaded almost 200,000 carslast year as part of its bankruptcy deal with creditors.

In late March, the company completed the sale of its Donlen vehicle leasing and fleet management business to Athene Holding Ltd. for$891 millionin cash, putting it on a stronger financial footing to emerge from bankruptcy next month.

The company, Stone said, is "making great progress towards concluding the bankruptcy process" by June 31.

"We remain on track to emerge in June and are poised to do so with more efficient operations and a stronger balance sheet for the future," he said.

Need a rental car?You're not alone. Shortage starts to hit home, and everywhere else

Paul Stone, CEO of Hertz(Photo: Courtesy Hertz Global Holdings)

On Monday, Hertz held a closed-door auction to choose the best financial sponsors for its reorganization plan after a bidding war broke out for ownership of the new company a few weeks ago.

Two groups have been aggressively competing to fund the exit plan since mid-April.

Hertz had not yet announced the results from the auction by the newspaper's deadline Monday.

Last week, Stone said in a news release that he anticipates the exit plan will "deliver a robust recovery for creditors and shareholders" alike,no matter who backs it.

More than a month ago, Hertz's directors determineda trio of companies Centerbridge Partners L.P., Warburg Pincus LLC and Dundon Capital Partners LLC hadthe "highest and best" financial proposal, selecting it as the equity sponsorfor its reorganization plan.

Then came a competing offer at the 11th hour, just as Hertzsought court approval to move ahead with its chosen sponsors.

A customer looks to rent a car at Hertz.(Photo: The News-Press / file)

Hertz conducted another round of bidding to givethe alternativegroup what it described as a "full and fair opportunity to present their best proposal."

As a result, theunderdog a group made up of Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital ManagementLP emerged with a "superior" proposal.

Hertz confirmed itreceived the revised offer last Tuesday, then announced Wednesday that it "constitutes a superior proposal" to the one put forward by its chosen plan sponsors.

The current plan sponsorsnotified Hertz that they wanted to make a counteroffer, triggering the court-approved auction.

Hertz held the auction ina"virtual room," under the supervision of its attorneys.

The companyoriginally announced the competinggroupKnighthead Capital Management and Certares Opportunities LLC as itspotential equity sponsors. The group lost its strongholdafter its successors stepped forward with a more favorable plan in the eyes of Hertz and its creditors.

Hertz hasn't publicly shared any of the details of the competing plans, but some information has leaked out to the national news media.

Bloomberg reported that the competing plan Hertz deemed as superior last week "aims to fund the exit through a direct common stock investment of $2.9 billion, preferred stock worth $1.5 billion and a $1.36 billion rights offering."

Hertz is in a hurry to get out of bankruptcy, with a court hearing scheduled for May 14 for the judge toapprove its plan sponsors.

By the third quarter, Hertz anticipatesthe demand for its cars to be much stronger, as itusually surgeswith travelers seeking summergetaways, so it wants to be ready for that business.

The sooner Hertz can speed its way out ofbankruptcy the better because it's so costly and the company desperately needs cashto rebuild its fleet and remain competitive.

The lobby of the Hertz global headquarters in Estero.(Photo: The News-Press file photo)

Hertz fell into bankruptcy last May, a little more than two months after COVID-19 became a global pandemic, bringing the tourism and travel industry to a virtual halt.

Catch up: Hertz bankruptcy could leave potholes in Southwest Florida economy

At the time of its Chapter 11 filings, the company had racked upnearly $20 billion in debt.

In addition to its namesake brand, Hertz operates the DollarandThriftycar rental services.

In May 2013,Hertzannounced the relocation of its global headquarters from New Jersey to Estero,following the acquisition of the Dollar Thrifty Automotive Group.

The new multimillion-dollar headquarters opened in 2015.

Read or Share this story: https://www.news-press.com/story/money/companies/2021/05/10/hertz-nears-june-exit-chapter-11-bankruptcy-business-improves/4989600001/

Follow this link:

Hertz sees signs of turnaround as it approaches exit from bankruptcy - News-Press