Hertz had sold hundreds of thousands of vehicles after bankruptcy
Lifeline good news for largest rental car firm
All is not lost for rental car giant Hertz, as the bankrupt company said earlier today that it had lined up significant loans to help re-invest into its inventory and keep the company operating.
After the global travel shutdowns and massive reductions caused by COVID-19, Hertz Global Holdings said that it was no longer in viable financial shape and filed for Chapter 11 protection. It first tried to issue more stock to raise funds, but that managed just $29 million and the plan was terminated. Later the company announced plans to sell more than 300,000 cars from its rental fleet in North America.
Now, Reuters reports, Hertz has secured US $1.65 billion (CAD 2.18b) in debtor-in-possession financing, which would allow the company to start investing up to $1b (CAD 1.3B) into its fleet, purchasing new vehicles in the US and Canada and returning to a level of vehicle availability closer to normal, though it may be a while before specials like the Hertz Camaro and Corvette offerings return to the fleet.
The remainder will be for working capital and other corporate purposes. The financing will come from some of the rental company’s creditors, and Hertz has filed for court approval of the deal, the report said.
While the tourism industry in general has been hammered by the pandemic, airport-centric rental firms like Hertz suffered a large blow. That blow was then felt by automakers, who have seen sales to fleets sink compared to the year before. While retail sales have returned largely to normal, automakers would likely also fare well from a fleet sale recovery.