Hertz cancels its stock sale plan and negotiates a loan

Hertz cancels its stock sale plan and negotiates a loan

Business

Car rental company Hertz , which filed for bankruptcy on May 22, decided to definitively cancel a sale of shares worth US $ 500 million and has applied for a loan to reorganize its business, various local media reported. This decision comes after today, for the second consecutive day, the listing of its shares was suspended, precisely because of the doubts raised by its capitalization plan through the sale of shares. The company’s stock fell 10% to $ 1.8 a share before the sale was canceled.

The shares were suspended on Wednesday a few hours after the United States Securities and Exchange Commission (SEC) voiced doubts about its $ 500 million share sale plan. SEC President Jay Clayton told CNBC Monday that the agency had raised a number of questions to Hertz’s plan that the company had not yet answered. “In this particular situation, we have let the company know that we have input on their plan. In most cases, when a company is informed that the SEC has comments on this, they do not move forward until they are resolved,” Clayton said, who did not detail what Hertz’s specific problems were or when the price break would rise.

Since the market touched bottom during the pandemic of the coronavirus , small investors are betting on bankrupt companies like Hertz because they have economic conditions suddenly improve. In the case of the rental company, for example, its shares had soared in recent months, going from 40 cents when it declared bankruptcy on May 22 to US $ 6 last Monday. However, the company warned potential investors in a report on its $ 500 million sale plan that they “are likely to lose their money,” claims that have surprised analysts. “Although we cannot predict how our securities will evolve, we anticipate that equity holders will not receive a recovery of their money if trading conditions are not quickly reached at levels prior to or close to pre-COVID-19,” said Hertz. in your own report.

Jason Amato

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