Car rental company Hertz has filed for bankruptcy protection under US Chapter 11 law.
However, operations must be able to continue during the process.
The American car rental company, in which activist investor Carl Icahn controls 39 percent of the shares, is filing for bankruptcy protection. The company, with debts of $19 billion, over 180 billion kronor, has been hit hard by the corona crisis. The almost 700,000 cars in the company's fleet have mostly been left standing as countries around the world have closed. According to the Financial Times, airport car rentals make up two-thirds of their business in the US and Europe.
”"Covid-19 has hit us hard and with uncertainty about when travel and the economy as a whole will recover, we must take further steps to manage a recovery that may be prolonged," writes CEO Paul Stone. in a statement.
The company has laid off staff and states that it has enough cash – more than $1 billion – to keep operations running.
On Friday Wall Street reported Journal that Hertz has failed to reach a settlement with its lenders and risks a forced sale of its car fleet. According to the newspaper, however, the company will have several weeks to reach a settlement. The goal is to avoid selling the entire fleet and instead reduce the number of cars, according to the American business newspaper.
”Hertz probably has no choice but to scale back operations and sell assets,” writes Joseph Acosta, who works in bankruptcy at the law firm Dorsey & Whitney. to Bloomberg.
Analysts have warned of the implications of a Hertz bankruptcy for the auto industry, which is a major customer for auto giants such as GM, Ford and Fiat Chrysler.
Forced sales of the fleet would also affect used car prices, in an already weak market. writes Bloomberg and the Wall Street Journal.
Even before the crisis, the company was struggling with competition from companies such as Avis, but also Uber and Lyft.
In early May The Financial Times reported that Hertz had reached an agreement to postpone a lease payment for its car fleet until May 22.
As recently as Monday, CEO Kathryn Marinello was replaced by Paul Stone, making him the company's fifth CEO since 2014.
Carl Icahn began buying shares in Hertz in 2014 and has three representatives on the board.
Hertz made a loss of $58 million last year, just over SEK 560 million. The debt situation can be linked to 2005, when the venture capital firm Clayton Dubilier & Rice bought the car rental company, writes WSJ.
There are concerns that business travel, which is important for Hertz, will not return to the same extent as before, as many companies during the corona crisis are increasingly conducting business without physical meetings, writes WSJ.
Source: di.se
