In a potentially rare outcome in a corporate bankruptcy, the revised plan if accepted will amount to a recovery of 60 to 70 cents a share for stockholders.
The new bid values Hertz at $6.2 billion and would pay unsecured bondholders in full.
Hertz chose the renegotiated proposal over a competing one from Certares and Knighthead Capital. The plan keeps Hertz on track to exit Chapter 11 in June.
The buyers, Knighthead Capital Management and Certares Management, would take at least a majority share and as much as 100% of the company. The proposed plan would pay in full all of Hertz's existing first- and second-lien debt and provide a 70% cash recovery to general unsecured creditors.
The company says it plans to emerge from Chapter 11 bankruptcy by mid to late summer.
Hertz will continue to trade on the over-the-counter (OTC) market, where the majority of stocks sold are penny stocks.
Up to $1 billion can be used to provide equity for vehicle acquisition in the U.S. and Canada.
Hertz Global Holdings has considered selling it’s Donlen leasing business if it can get at least $1 billion and has several buyers interested in the fleet management company, chiefly private equity funds, according to a report from Bloomberg.
The settlement suspends litigation with debtors. Hertz agrees to pay $650 million and dispose of at least 182,521 leased vehicles by December 31.
A dragged-out post-lockdown recovery, a huge debt pile, and the potential for zero recoveries for unsecured creditors make the Hertz bankruptcy a likely liquidation, says Wall Street analyst Girish Bhise.