Hertz Global Holdings Inc. (OTCMKTS:HTZGQ) is slowly climbing the ladder after imploding to record lows on filing for bankruptcy and getting delisted from the New York Stock exchange. The 100-year old company has had a year to forget its core business, having come under pressure on the pandemic, taking a toll on the air travel industry that the company relies heavily on for revenues.
Hertz Woes
Not every car rental company has capitulated amid the pandemic. Avis Budget Group Inc. (NASDAQ:CAR) is thriving, with the stock up by more than 12% for the year. It’s a whole different ball game for Hertz, the company having gone burst due to a huge debt load of more than $24 billion.
The company lost all its revenue streams on the pandemic bringing the air travel industry to a halt. The pilling of losses amid subdued revenues resulted in various cost-containment measures, some of which resulted in the laying off and disposal of non-core assets.
The stock's delisting from the New York Stock Exchange was the last nail on the coffin after billionaire investor Carl Icahn offloaded 39% of his stake in the car rental service. After initially settling down below the $1 a share level amid the wave of negative news, the stock has once again started bouncing back, waiting to see if the upward momentum will gather pace.
Financing Deal
The bounce-back comes hot on the heels of reports that the car rental company is arranging more financing. In the recent past, the stock has rallied by more than 100% on confirmation of a debtor in the possession financing agreement.
The DIP agreement is poised to inject up to $1.6 billion into the embattled car rental company balance sheet. In this case, Hertz should be able to cover its operating losses. There are reports that the company could also move to update its fleet.
For how long the company will continue spending money until it becomes profitable is still a subject of discussion. As the pandemic ravages resulting in lockdown and subdued travel activities, Hertz core business looks set to remain under pressure.