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Hertz sells $750 million in bonds to strengthen finances
(Bloomberg) — Hertz Global Holdings Inc. increased the size of a junk bond sale by a third to $1 billion, as the rental car company works to shore up its balance sheet after a misstep in its vehicle fleet electrical.
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The company priced $750 million in first-lien secured notes due 2029, an increase from the previous $500 million, at par for a yield of 12.625%, according to a person familiar with the matter, tighter than than the previous conversation about the 12.75% area. The company initially presented a yield in the area of 13% to investors.
JPMorgan Chase & Co. is leading the deal. She declined to comment and Hertz did not immediately respond to a request for comment.
Hertz has received a commitment to purchase up to $500 million in bonds, it said in a morning statement.
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The company is also selling $250 million in second-lien exchangeable notes due 2029. Hertz said it has received anchor orders from CK Amarillo LP — a fund created by Certares Management and Knighthead Capital Management — and another investor to possibly purchase the entire offering.
These notes were being offered with an 8% coupon and a conversion price of between $6 and $7 per share. other people with knowledge of the matter said.
Hertz’s 4.625% bond due 2026 fell 4.75 cents on the dollar to 68.25 cents at 3:30 p.m. Thursday in New York, according to price source Trace, on track for a record low of closure. S&P Global Ratings downgraded Hertz following its capital raise announcement, citing higher debt and interest expenses associated with the new bonds, while Fitch Ratings said it was considering doing the same.
Sounding
Bloomberg previously reported that Hertz was sounding out investors about a $500 million senior secured debt financing, as well as raising $200 million in convertible bonds.
The company said it plans to use the net proceeds to repay a portion of its $2 billion committed revolving credit facility.
Hertz also said in a regulatory filing on Thursday that it is accelerating a planned fleet upgrade after announcing earlier this year that it would sell a third of its electric vehicles in the US. The rental company had completed two-thirds of its planned sale of 30,000 vehicles as of May 31.
The story continues
The acceleration is shifting more non-monetary depreciation to short-term periods. In the second quarter, Hertz expects an adjusted corporate loss before interest, taxes, depreciation and amortization of $435 million to $495 million.
–With assistance from Maria Clara Cobo, Gowri Gurumurthy and Amy Or.
(Updates with pricing details in second paragraph. An earlier version misspelled the company name in the first paragraph.)
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