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Hertz Global Holdings (B): Uses of Debt and Equity 2020

Hertz Global Holdings (B): Uses of Debt and Equity 2020

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Yale School of Management
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In 2019, Hertz held a successful rights offering and restructured some of its debt. CEO Kathyrn Marinello and CFO Jamere Jackson were moving the company toward what seemed to be sustainable profitability, having implemented major structural and financial reforms. Analysts predicted a rosy future. Travel, particularly corporate travel, was increasing as the economy grew.

But forecasts of positive trajectories turned abruptly with the COVID-19 pandemic. Car rental bookings and revenues plunged as travel, especially business travel, ground to a halt in the first quarter of 2020.5 Hertz's revenues plummeted and the company found it could not meet its debt payments. At the May 12 first-quarter earnings call for 2020, Marinello said, "No business is built for zero revenue. There's only so long that companies' reserves will carry them." On May 22, Hertz sought protection from its creditors, filing for bankruptcy under Chapter 11. 

Throughout its 100-year history, Hertz had gone through a wide range of ownership structures, adopting a variety of debt and equity structures. With all the creativity that the company had shown in its financial arrangements, did it have any options remaining, even while under the court-led reorganization?

Publication Date:  2021-01-11

Suggested Citation: Jean Rosenthal, Geert Rouwenhorst, Jacob Thomas, Allen Xu, "Hertz Global Holdings (B): Uses of Debt and Equity 2020," Yale SOM Case 20-031, January 11, 2021.

Teaching Note: No