Hertz Global Holdings has plans to leave Chapter 11 bankruptcy protection in the United States after nearly a year.
Knighthead Capital Management and Certares Opportunities have committed to invest up to $4.2 billion to purchase up to 100 per cent, but not less than a majority, of the common stock of the fallen car rental giant.
Along with $1 billion in new funding, and a $1.5 billion revolving credit facility, it is hoped the company can emerge from restructuring in mid-summer this year.
The equity investment will take the form of a direct purchase of up to approximately $2.3 billion of common equity of reorganised Hertz, together with a commitment to backstop a rights offering for up to approximately $1.9 billion.
The next step in this process is for the bankruptcy court to approve the terms of the plan sponsors’ proposed investment, the disclosure statement and creditor solicitation materials at a hearing scheduled for April.
Paul Stone, Hertz chief executive, said: “We are excited to reach this important milestone in our restructuring process.
“Our plan of reorganisation provides us a clear path forward to completing our financial restructuring and emerging from Chapter 11 by early to mid-summer.
“The support of the plan sponsors demonstrates their confidence in Hertz’s growth potential; moreover, they bring valuable experience in the travel and leisure industry.”
Stone added: “We have been making excellent progress on our financial and operational initiatives and repositioning our business as we prepare for increased travel demand as the pandemic subsides.”
Certares and Knighthead have recently formed the CK Opportunities Fund, a co-managed vehicle specifically dedicated to investments in travel and leisure.
Knighthead is a credit-investment management firm established in 2008 with $5.5 billion of assets under management.
Certares is a private investment platform dedicated to investing in the travel, tourism and hospitality sectors with approximately $4.5 billion of assets under management.