Two investment firms, Knighthead Capital Management and Certares Management, have agreed to pay a combined $4.2 billion to buy Hertz Global Holdings, according to a statement by Hertz.
The agreement, announced on March 2, would have the buyers take at least a majority share and as much of as 100% of the company. The proposal entails a new $1 billion first-lien financing, a new $1.5 billion revolving credit facility, and a new asset-backed securitization facility to finance Hertz's U.S. vehicle fleet, which will provide the financial restructuring needed to emerge from Chapter 11 in early to mid-summer.
Under the plan, Knighthead and Certares would take control of Hertz when it exits Chapter 11. The final value of the deal is dependent on how much existing lenders participate in the financing.
Last year, Knighthead and Certares created an investment fund that looks to capitalize on an expected rebound in travel companies disrupted by the coronavirus pandemic.
The plan still needs the approval of the bankruptcy court. A hearing to approve the terms of the plan is scheduled for April 16.
If confirmed, the proposed plan would provide for the payment in cash in full of all of Hertz's existing first- and second-lien debt and all administrative and priority claims, including the obligations owed under Hertz's $1.65 billion debtor-in-possession facility. It would also result in a 70% cash recovery to general unsecured creditors, who have the option to elect to take a portion of their recovery in the form of common equity in reorganized Hertz.
In addition, certain obligations of Hertz's international businesses, which are not in Chapter 11, are planned to be restructured by mutual agreement of the parties.