On May 20, Hertz Global Holdings Inc. announced that it has priced public offerings of its common stock and convertible senior notes. Total gross proceeds from the offerings and the substantially concurrent private placement to investment funds associated with Clayton, Dubilier & Rice Inc. and The Carlyle Group, existing stockholders of Hertz Holdings, will be approximately $949 million, exclusive of any proceeds attributable to the underwriters’ possible exercise of their options to purchase additional securities described below. The closing of the public offerings is expected to occur on May 27, 2009, subject to customary closing conditions. The closing of the private placement is expected to occur in June 2009, subject to the closing of the public offering of common stock and the delivery of an information statement to stockholders.
Hertz Holdings agreed to sell 46,000,000 shares of common stock at a public offering price of $6.50 per share. In connection with this offering, Hertz Holdings granted the underwriters a 30-day option to purchase an additional 6,900,000 shares of common stock. Separately, the investment funds associated with existing stockholders of Hertz Holdings agreed to purchase in the private placement 32,102,728 shares of common stock at a price of $6.23 per share, which is equal to the price per share in the public offering of common stock less the underwriting discounts and commissions payable to the underwriters.
Hertz Holdings also agreed to sell, concurrently with the sale of the common stock, $450 million aggregate principal amount of convertible senior notes due June 1, 2014 in an underwritten registered public offering. In connection with this offering, Hertz Holdings granted the underwriters a 30-day option to purchase up to an additional $67.5 million aggregate principal amount of convertible senior notes. The convertible senior notes will pay interest semi-annually at a rate of 5.25 percent and will be convertible, under certain circumstances, into cash or shares of Hertz Holdings common stock, or a combination of cash and shares, at the option of Hertz Holdings, at a conversion rate of 120.6637 shares of common stock per $1,000 principal amount of convertible senior notes, which is equivalent to an initial conversion price of approximately $8.2875 per share of common stock, subject to adjustment in certain circumstances. This initial conversion price represents a premium of 27.5 percent relative to the public offering price of Hertz Holdings common stock of $6.50 per share in the common stock public offering.
Hertz Holdings may not redeem the convertible senior notes prior to their maturity. Holders of the convertible senior notes may require Hertz Holdings to repurchase all or a portion of their convertible senior notes upon a fundamental change at a cash repurchase price equal to 100 percent of the principal amount thereof to be repurchased plus accrued and unpaid interest. The convertible senior notes will rank equally in right of payment with Hertz Holdings’ existing and future senior unsecured indebtedness.
Hertz Holdings intends to use the proceeds from the offerings to increase its liquidity and for general corporate purposes, including the repayment of consolidated debt.
J.P. Morgan Securities Inc., Goldman, Sachs & Co., Merrill Lynch & Co. and Barclays Capital Inc. are acting as joint book-running managers for the offerings.