Hertz Gets $1.65 Billion Bankruptcy Loan From Apollo, Others

(Bloomberg) -- Hertz Global Holdings Inc. has arranged a new $1.65 billion debt package to help it reorganize while in bankruptcy, sending shares jumping 40% before the market opened.Should the financing package win court approval, a group of the company’s first-lien lenders will provide the money at an initial interest rate of 7.25 percentage points above the London interbank offered rate, the car rental giant said Friday. The group will also collect an undisclosed amount of fees. Lenders who signed a letter committing to fund the loan include Apollo Global Management, Diameter Capital Partners and Silver Point Capital, according to court documents.As much as $1 billion of the debt can be used for vehicle acquisition in the U.S. and Canada, while up to $800 million can be used for working capital and general corporate purposes, Hertz said in a statement.The proposed loan is a sign that senior lenders are confident in Hertz’s ability to reorganize and pay them back. The loan matures at the end of 2021 and has a limited number covenants that would cause a default, Hertz said in court papers. Under the deal, the company must file a Chapter 11 reorganization plan by Aug. 1, 2021.Hertz filed bankruptcy in May when the near-total shutdown of global economy caused rentals to drop dramatically. Despite the Chapter 11 filing, which would normally wipe out shareholders, Hertz’s stock price remained so high that the company tried unsuccessfully to sell shares to fund the case.Bloomberg earlier reported the car rental company was negotiating with creditors on a potential loan package to get it through the reorganization process. The new financing needs approval from Hertz’s bankruptcy judge, and a hearing is set for Oct. 29.The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington). To view the docket on Bloomberg Law, click here.(Updates with lenders who signed financing letter in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.