Hertz seeking coronavirus bailout, bracing for budget shortfalls
Hertz Global Holdings bracing for budget deficiency of between $1B to $1.5B
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Hertz is hoping to cash in on the coronavirus bailout package as the car rental and sales company is expecting to be short at least $1 billion in future months as a result of new coronavirus-caused business shortfalls, the New York Post reported.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HTZ | HERTZ GLOBAL | 4.92 | +0.30 | +6.49% |
Sources told the outlet Hertz Global Holdings is bracing for a budget deficiency of between $1 billion to $1.5 billion and only has approximately $1 billion in cash to make up for it.
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A Hertz spokesperson did not immediately respond to FOX Business' request seeking comment.
(REUTERS/Stephane Mahe/File Photo)
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Hertz used $10 billion in financing for the purchase of 500,000 for it's used car sales program through asset-backed securities – which means it used the value of the cars as collateral – but in turn, must pay the difference when the car values decrease, and must do so within three months if the values don't increase in that time, the outlet reported.
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As of April, pre-owned car values were down between 12 and 15 percent will likely continue to be down, Jefferies analyst Hamzah Mazari told the outlet.
O.J. Simpson in undated Hertz ad. (Credit: Hertz)
The Carol Icahn-owned company, famous for landing OJ Simpson as the face of the brand in the 70s, is hoping to avoid a potential summer bankruptcy – and even the need to sell – by filing with the aid of the coronavirus bailout.
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"If we can't make a deal with them, we go bankrupt," an insider told the Post. "It's a coin toss whether Hertz does not go bankrupt by the summer."
Icahn, who Forbes has reported to be worth approximately $14 billion as of Thursday, owns 39 percent of Hertz.