Hertz wants to keep European business solvent as it eyes US bankruptcy
Hertz Global Holdings wants to keep its business in Europe
solvent as it prepares for a possible bankruptcy filing in the US, The Post has
learned.
The struggling car-rental giant backed by billionaire Carl
Icahn on Friday asked lenders to its European division, which represents about
20 percent of sales, to sign a waiver by this Friday that will allow it to
avoid bankruptcy, a source said.
Hertz would likely ask for such waiver only if it planned to
throw the much larger US division into bankruptcy, according to sources close
to the situation.
The company’s European division is stronger financially than
the US arm as a larger percentage of its fleet of cars can be sold back to
automakers at guaranteed prices, according to sources.
After missing a May 4 deadline to pay roughly $500 million
to creditors, Hertz fought for and was granted an extension until Friday, May
22. It is seeking the waiver as it nears the second deadline at a time when the
coronavirus has crushed it’s business.
“It is possible they get a few extra days [beyond Friday] to
make the payment, but nothing more,” a source said.
On Monday, Hertz said Kathryn Marinello resigned as chief
executive and has been replaced by Paul Stone, most recently head of the
company’s North American retail operations.
Icahn, who owns 39 percent of Hertz, liked Marinello,
according to sources, and it’s possible that she quit rather than being forced
out. But as The Post has previously reported, Hertz under Marianello failed to
financially prepare for the coronavirus, including turning down a $300-$500
million loan in March. She has agreed to be a consultant to the company for the
next year.
Marinello’s departure may not be not a good sign, according
to Jefferies analyst Hamzah Mazari, who notes that a recent Wharton Business
School study suggests that within the US only 14 percent of CEOs stay on
through bankruptcy.
“Given that only 14 percent of CEOs stay through bankruptcy
and given that we only have a few days before the forbearance ends, chances of
a filing are very high,” Mazari told The Post.
In morning trading, Hertz was recently down 3 percent to
$3.07.
Hertz did not immediately return a call for comment.
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