Hertz Global Holdings Inc. has arranged a new $1.65 billion debt package to help it reorganize while in bankruptcy, sending shares soaring 80 percent in morning trading.
Should the financing package win court approval, a group of the company’s first-lien lenders will provide the money at an initial interest rate of 7.25 percentage points above the London interbank offered rate, the car rental giant said Friday. The group will also collect an undisclosed amount of fees.
Lenders who signed a letter committing to fund the loan include Apollo Global Management, Diameter Capital Partners and Silver Point Capital, according to court documents.
As much as $1 billion of the debt can be used for vehicle acquisition in the U.S. and Canada, while up to $800 million can be used for working capital and general corporate purposes, Hertz said in a statement.
The proposed loan is a sign that senior lenders are confident in Hertz’s ability to reorganize and pay them back. The loan matures at the end of 2021 and has a limited number covenants that would cause a default, Hertz said in court papers. Under the deal, the company must file a Chapter 11 reorganization plan by Aug. 1, 2021.
