Bankrupt car rental company Hertz Global Holdings Inc said on Friday it had lined up $1.65 billion in debtor-in-possession financing, sending its shares soaring.
Hertz plans to invest up to $1 billion in vehicle acquisitions in the United States and Canada, and up to $800 million for working capital and general corporate purposes. This after listing much of its idled fleet for sale in early summer — nearly 200,000 vehicles.
"This new financing will provide additional financial flexibility as we continue to navigate the pandemic's effects on the travel industry and take steps to best position our business for the future," said Chief Executive Paul Stone.
Debtor-in-possession is a form of financing for companies in Chapter 11 bankruptcy that allows them to keep operating. The financing will be provided by some of the company's creditors, Hertz said. It has filed a motion for approval of the financing by the U.S. Bankruptcy Court for the District of Delaware.
The more than a century old company's shares jumped 96% to $2.02 in premarket trading.
By the end of March in the coronavirus pandemic, Hertz had racked up more than $24 billion in debt, according to its bankruptcy filing, with only $1 billion of available cash. In late March, Hertz shed 12,000 workers and put another 4,000 on furlough, cut vehicle acquisitions by 90% and stopped all nonessential spending.
Hertz then filed for bankruptcy protection on May 22 after its business was decimated during the pandemic and talks with creditors failed to result in much-needed relief.
Financier Carl Icahn’s holding company is Hertz’s largest shareholder, with a 38.9% stake in the company, according to FactSet.
Material from The Associated Press was used in this report.