Hertz Global Holdings Inc. filed a proposed reorganization plan and disclosure statement in bankruptcy court in Wilmington, Del., that provides for plan sponsors Knighthead Capital Management and Certares Opportunities LLC to invest up to $4.25 billion to purchase up to 100%, but not less than a majority, of the reorganized company.
A hearing to approve the disclosure statement is set for April 16, the company said.
According to the company's March 2 announcement, "this proposed investment, if consummated, will, together with a new $1 billion first-lien financing, a new $1.5 billion revolving credit facility, and a new asset-backed securitization facility to finance Hertz's U.S. vehicle fleet, provide the basis for the proposed plan and the funding needed for Hertz to complete its financial restructuring and emerge from Chapter 11 in early to mid-summer."
The company said the equity investment would take the form of a direct purchase of up to roughly $2.3 billion of common equity of the reorganized company, representing a 51% stake on a fully diluted basis, together with a commitment to backstop a rights offering for up to about $1.9 billion of common equity that would be made available to unsecured creditors under the proposed reorganization plan, representing 44% of the reorganized equity on a fully diluted basis.
The plan provides for 5%-10% of the equity to be set aside for a management incentive plan.
According to the disclosure statement, the plan implies a total enterprise value of the reorganized company of about $4.846 billion.
According to the company, the plan also provides for the payment in full, in cash, of all of the company's existing first- and second-lien debt, as well as the company's $1.65 billion debtor-in-possession, or DIP, facility.
As for Europe, the plan, in conjunction with an English scheme of arrangement, provides for the allowance of an unsecured funded debt claim with respect to the company's guarantee of certain notes issued by the company's affiliate, HHN, in the amount of $790 million; the purchase of such claim by the plan sponsors or the payment of such claim under the plan, in either case, for a cash payment equal to 70% of such claim, or roughly $553 million; and the issuance of €250 million in new notes by Hertz International Ltd., a direct subsidiary of Hertz Corp. and the parent of HHN.
The company said the transactions "are sufficient to comprehensively restructure their European business."
To the extent that claims are purchased by plan sponsors, affording them subscription rights to up to 12% of the new equity, the sponsors' direct equity purchase commitment would be correspondingly reduced.
Last, but not least, the company's current equity will be eliminated.
White & Case LLP is serving the company's legal adviser, Moelis & Co. as its investment banker and FTI Consulting as its financial adviser.
