Hertz assesses two groups of creditors’ plans for bankruptcy loan

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Hertz Global Holdings Inc. is negotiating a loan with its creditors to bolster operations after months of funding during the bankruptcy, according to people familiar with the talks.

The car rental company is considering two interim loan offers of around $ 1 billion to $ 1.5 billion, said one of the people, who asked not to be named to discuss the private negotiations. The proposals came from a group of Hertz unsecured creditors and a separate group of senior creditors, the person said. The offers are not formal yet and could fail as parties work on the details, the people added.

A representative for Hertz, based in Estero, Fla., Did not immediately respond to a request for comment.

Hertz filed for bankruptcy in May without a usual debtor-operator loan already in place, choosing instead to rely on a large stock of cash on hand. The company first announced it would apply for a DIP loan in August, after its attempt to raise funds by selling potentially worthless stocks failed.

Cash flow issues

In the meantime, the company has resolved an impasse with lenders over its fleet leases and has benefited from the rebound in used vehicle prices.

Hertz has said in a previous filing that he is looking for new sources of money. The travel industry remains in a deep slump and much of the proceeds from vehicle sales have been used to repay creditors.

Hertz had sought to avoid lifting traditional bankruptcy financing while negotiating debt restructuring with asset-backed security holders who indirectly control the company’s rental car fleet.

The leasing company eventually agreed to pay the lenders $ 650 million to cover the 2020 lease obligations, an amount likely lower than it would normally need to cover lease payments and depreciation costs. Despite this, weak demand in its core business and uncertainty related to the pandemic make it need more cash.

Revenue fell 67% in the second quarter from a year earlier, resulting in a loss of $ 587 million. He had about $ 1.4 billion in cash as of June 30.

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