Hertz Global Holdings Inc. today announced that it has secured commitments for debtor-in-possession (DIP) financing totaling $1.65 billion and has filed a motion for approval of the financing by the U.S. Bankruptcy Court for the District of Delaware. According to an 8-K SEC filing, Hertz expects that the financing will provide it with sufficient liquidity to fund its ongoing operations during Chapter 11.
Paul Stone, Hertz president and CEO said in a statement today: "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. We are pleased with the strong interest from our pre-petition first-lien lenders and appreciate their support of Hertz and our future opportunities as a rental car leader."
The proposed DIP financing will support the company as it moves through its next stage of its Chapter 11 process. The financing will be provided by some of Hertz’s as yet unnamed pre-petition first-lien lenders, containing "economic terms that are the most favorable to the Debtors compared to other proposals received by the Debtors," according to the 8-K filing.
The interest on the debt is calculated at LIBOR plus 7.25%, , which is reduced to LIBOR plus 6.75% “upon a significant repayment of prepetition first lien debt.” The DIP Facility matures on December 31, 2021 and requires the filing of a plan by August 1, 2021.
Up to $1 billion can be used to provide equity for vehicle acquisition in the U.S. and Canada. Up to $800 million can be used for working capital and general corporate purposes. The financing is subject to court approval, with a hearing scheduled for October 29.