Hertz leads the market with the highest trading volume of more than 395 million.
Shares of Hertz Global Holdings Inc. (HTZ) rallied in the premarket today after the company reported that it has arranged a new $1.65 billion financing package to support and help the firm reorganize while in bankruptcy.
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HTZ shares doubled followed by the update and the stock kicked off at $2.40. The shares of Hertz crossed the highest share price since mid-June. As we write this at 11:22 A.M. EDT, HTZ was trading at $1.96 up by 90%. The trading volume of the stock remains to be the highest today surpassing NIO and GE stocks, trading with a volume of almost 395 million.
Hertz’s stock surged to a maximum of 178% in the premarket on Friday trading at $2.86.
The company has arranged $1.65 billion financing package that will help the company to reestablish. Hertz intends to invest around $1 billion in vehicle acquisitions in the U.S. and Canada while using $800 million for general corporate purposes and working capital.
The President of the company, Paul Stone highlighted that this financing will provide additional financial flexibility to the company’s operations while they fight against the global pandemic. He said:
“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.”
If the bankruptcy loan wins the court approval, a group of Hertz’s first-lien lenders will provide the money at an initial interest rate of approximately 7.25%, which will be above the rate that London interbank offered.
Reportedly, the court documents say that the group will also obtain an undisclosed amount of fees. Those who signed a letter agreeing to fund the loan include Apollo Global Management, Silver Point Capital, and Diameter Capital Partners
The following loan proposal is a major sign that senior lenders have shown confidence in Hertz Global and they see the company bouncing back once again and later on pay them back. The maturity period of the loan is by the end of 2021. Under the loan deal with lenders, Hertz must file a Chapter 11 reorganization plan by August 1, 2021.
The new financing needs approval from Hertz’s bankruptcy judge, and a hearing is scheduled for October 29. Hertz Global Holdings Inc. (HTZ) filed for bankruptcy in May when the global pandemic impacted the most and the shut-down of the global travel industry caused serious problems.