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Tuesday, May 26, 2020

Hertz Global (HTZ) files for bankruptcy due to coronavirus crisis

  • The New York Stock Exchange initiated proceedings to delist Hertz Global Holdings Inc (NYSE: HTZ) on Tuesday following the car rental chain's bankruptcy filing.   
 







Hertz Global announces it and certain of its US and Canadian subsidiaries have filed voluntary petitions for reorganization under Chapter 11 in the US Bankruptcy Court for the District of Delaware 

  • The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action. The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the company for the future as it navigates what could be a prolonged travel and overall global economic recovery.
  • Hertz's principal international operating regions including Europe, Australia and New Zealand are not included in today's U.S. Chapter 11 proceedings. In addition, Hertz's franchised locations, which are not owned by the company, also are not included in the Chapter 11 proceedings.
  • As of the filing date, the company had more than $1 billion in cash on hand to support its ongoing operations. Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the company may seek access to additional cash, including through new borrowings, as the reorganization progresses.
  • Hertz was on a strong upward financial trajectory prior to the COVID-19 pandemic, including ten consecutive quarters of year-over-year revenue growth and nine quarters of year-over-year adjusted corporate EBITDA improvement. In January and February 2020, the company increased global revenue 6% and 8% year over year, respectively, driven by higher U.S. car rental revenue. In addition, the company was recognized as No. #1 in customer satisfaction by J.D. Power and as one of the World's Most Ethical Companies by Ethisphere.
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