Hertz in talks with banks and treasury in push to avoid bankruptcy
Hertz Global Holdings Inc. is doing everything it can to preserve cash and get leniency from its lenders to avoid a bankruptcy filing amid a collapse in the travel industry, Chief Executive Officer Kathryn Marinello said in an interview.
The company has been in discussions with creditors for weeks and is still pushing the U.S. Treasury Department to help rental-car companies, which Marinello says have been hit as hard as the airline sector by travelers staying home due to the coronavirus pandemic.
“We are seeking the support of our lenders and banks,” said Marinello, whose biggest shareholder at Hertz is billionaire investor Carl Icahn. “We are also seeking the support of the government. Yes, we can avoid bankruptcy.”
Hertz is working with several advisory firms to restructure its balance sheet, people familiar with the matter said. While the company is preparing for bankruptcy as a possibility, the people said it’s a last-resort option.
The company’s shares fell 16% as of 12:30 p.m. in New York trading, paring an earlier decline of as much as 29%. The Wall Street Journal reported earlier on the preparation toward a possible bankruptcy.
Hertz disclosed earlier Wednesday that the company missed substantial lease payments related to the cars it rents out. With business down about 80% since the pandemic took hold, Hertz has furloughed thousands of workers without pay and looked for ways to stay afloat until travelers reemerge.
The missed payments were the clearest indication yet that Hertz hasn’t come to an agreement with its banks for forbearance. If Hertz doesn’t make payments by the end of a grace period on May 4, and enough lenders and note holders don’t agree to waive a resulting default, the company said it could be “materially and negatively affected.”
Hertz’s filing “suggests it is struggling to obtain all necessary amendments and waivers to reduce its required payments,” Joel Levington, a Bloomberg Intelligence credit analyst, said in note. “Should it achieve that, we think raters may view the changes in terms as tantamount to a selective default, and without the change, the potential for a corporate restructuring is possible.”