Voluntarily Files for Chapter 11 Reorganization
As an Essential Business, Hertz and Subsidiaries Around the
World Remain Open with Same Award-Winning Service for
Customers
All Customer and Loyalty Programs Expected to Continue as
Usual
$1 Billion in Cash on Hand to
Support Continuing Operations
ESTERO, Fla., May 22, 2020 /PRNewswire/ -- Hertz Global
Holdings, Inc. (NYSE: HTZ) ("Hertz" or the "Company") today
announced it and certain of its U.S. and Canadian subsidiaries have
filed voluntary petitions for reorganization under Chapter 11 in
the U.S. 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.
All Hertz Businesses Remain Open and Serving
Customers
All of Hertz's businesses globally, including its Hertz, Dollar,
Thrifty, Firefly, Hertz Car Sales, and Donlen
subsidiaries, are open and serving customers. All
reservations, promotional offers, vouchers, and customer and
loyalty programs, including rewards points, are expected to
continue as usual. Customers can count on the same high level of
service and reliability, including new initiatives such as "Hertz
Gold Standard Clean" sanitization protocols to provide additional
safety in response to the COVID-19 pandemic.
"Hertz has over a century of industry leadership and we entered
2020 with strong revenue and earnings momentum," said Hertz
President and CEO Paul Stone. "With
the severity of the COVID-19 impact on our business, and the
uncertainty of when travel and the economy will rebound, we need to
take further steps to weather a potentially prolonged recovery.
Today's action will protect the value of our business, allow us to
continue our operations and serve our customers, and provide the
time to put in place a new, stronger financial foundation to move
successfully through this pandemic and to better position us for
the future. Our loyal customers have made us one of the world's
most iconic brands, and we look forward to serving them now and on
their future journeys."
First Day Motions
As part of the reorganization process, the Company will file
customary "First Day" motions, which should allow it to maintain
operations in the ordinary course. Hertz intends to continue to
provide the same vehicle quality and selection; to pay vendors and
suppliers under customary terms for goods and services received on
or after the filing date; to pay its employees in the usual manner
and to continue without disruption their primary benefits; and to
continue the Company's customer loyalty programs.
Sufficient Cash to Support Operations
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.
Strong Upward Trajectory
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.
Taking Actions in Response to COVID-19
When the effects of the crisis began to manifest in March,
causing an increase in car rental cancellations and a decline in
forward bookings, the Company moved quickly to adjust. Hertz took
action to align expenses with significantly lower demand levels by
closely managing overhead and operating costs, including:
- reducing planned fleet levels through vehicle sales and by
canceling fleet orders,
- consolidating off-airport rental locations,
- deferring capital expenditures and cutting marketing spend,
and
- implementing furloughs and layoffs of 20,000 employees, or
approximately 50% of its global workforce.
The Company actively engaged with many of its largest creditors
to temporarily reduce the required payments under the Company's
vehicle operating lease. Although Hertz negotiated short-term
relief with such creditors, it was unable to secure longer-term
agreements. Additionally, the Company sought assistance from the
U.S. government, but access to funding for the rental car industry
did not become available.
Additional Information
White & Case LLP is serving as legal advisor, Moelis
& Co. is serving as investment banker, and FTI Consulting is
serving as financial advisor.
Additional information for customers regarding Hertz's
restructuring is available www.hertz.com/drivingforward. Court
filings and information about the claims process for suppliers and
vendors are available at
https://restructuring.primeclerk.com/hertz, by calling the
Company's claims agent at (877) 428-4661 (toll-free in the U.S.) or
(929) 955-3421 (for parties outside the U.S.) or emailing
hertzinfo@primeclerk.com.
ABOUT HERTZ
The Hertz Corporation, a subsidiary of
Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty
vehicle rental brands throughout North America, Europe,
the Caribbean, Latin America, Africa,
the Middle East, Asia, Australia and New
Zealand. The Hertz Corporation is one of the largest worldwide
vehicle rental companies, and the Hertz brand is one of the most
recognized globally. Product and service initiatives such as
Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile
Wi-Fi and unique vehicles offered through its specialty collections
set Hertz apart from the competition. Additionally, The Hertz
Corporation owns the vehicle leasing and fleet management leader
Donlen Corporation, operates the Firefly vehicle rental brand and
Hertz 24/7 car sharing business in international markets and sells
vehicles through Hertz Car Sales. For more information about The
Hertz Corporation, visit: www.hertz.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains
"forward-looking statements" within the meaning of federal
securities laws. Words such as "expect" and "intend" and similar
expressions identify forward-looking statements, which include but
are not limited to statements related to our liquidity, the
expected effects on our business, financial condition and results
of operations due to the spread of the COVID-19 virus, the
bankruptcy process, the Company's ability to obtain approval from
the Bankruptcy Court with respect to motions or other requests made
to the Bankruptcy Court throughout the course of the Chapter 11
cases, the effects of the Chapter 11 cases, including increased
professional costs, on the Company's liquidity, results of
operations and business, the Company's ability to comply with the
continued listing criteria of the New York Stock Exchange (the
"NYSE") and risks arising from the potential suspension of trading
of the Company's common stock on, or delisting from, the NYSE, the
effects of Chapter 11 on the interests of various constituents and
the ability to negotiate, develop, confirm and consummate a plan of
reorganization. We caution you that these statements are not
guarantees of future performance and are subject to numerous
evolving risks and uncertainties that we may not be able to
accurately predict or assess, including those in our risk factors
that we identify in our most recent annual report on Form 10-K for
the year ended December 31, 2019, as
filed with the Securities and Exchange Commission on February 25, 2020, and quarterly reports on Form
10-Q filed subsequent thereto. We caution you not to place undue
reliance on our forward-looking statements, which speak only as of
the date of this filing, and we undertake no obligation to update
this information.
View original
content:http://www.prnewswire.com/news-releases/hertz-global-holdings-takes-action-to-strengthen-capital-structure-following-impact-of-global-coronavirus-crisis-301064610.html
SOURCE Hertz Global Holdings, Inc.