Carl Icahn’s car rental company, Hertz, may slip into liquidation, The Post has learned.
102-year-old Hertz – known for knocking O.J. Simpson as his spokesman in the 1970s – could file for bankruptcy in the coming days related to the payment of slow guarantees that would be due on Friday.
As The Post reported earlier, company executives had tried to delay payments of around $ 500 million – related to the impairment of 500,000 Hertz cars – until after the coronavirus crisis had passed. But so far they have failed to get enough creditors.
Meanwhile, financiers and Wall Street analysts who calculate the numbers say the former leader of the category might be more valuable if sold in part. If a senior lender holding about $ 3.4 billion in debt agrees, Hertz can be forced into liquidation even if he plans to continue operating with the approval of the lender through Chapter 11, the source said.
“It might be in the interest of senior creditors to liquidate,” said a Wall Street researcher. “I think that is a real different possibility.”
The researcher thinks Hertz creditors can get more than $ 2 billion through sales in small increments, including two profitable business units – the Donlen division, which manages a fleet of vehicles for large companies such as Anheuser-Busch and PepsiCo, and European car rental companies.
Other assets, including real estate, trademarks and car fleets, could print another $ 750 million – totaling $ 2.25 billion, or 66 cents for senior lenders, researchers said.
Researchers are asked to remain anonymous because the company has a stake in Hertz’s bankruptcy, but Jefferies analyst Hamzah Mazari also believes Hertz creditors can earn a little money from selling parts of the company.
While Mazari’s total number is more conservative – at $ 1.6 billion – it is still more than expected by creditors. “I think liquidation is a possibility,” the analyst told The Post.
Hertz, who boasts Icahn as a 39 percent stakeholder, can also find buyers for the whole policy, but with the industry in the tank during a pandemic, it may be difficult to find someone who is willing to pay more to please creditors.
“At the moment, I don’t think anyone will write the check,” Hertz lender told The Post, adding that at least $ 1.5 billion would be needed for creditors to approve the deal. “Whether someone will invest depends on what is happening in the economy.”
Hertz generated about $ 650 million in profit before tax, interest, depreciation and amortization in 2019, but is expected to produce far less in the coming months and even years because its customers, including many companies, have been severely hampered by coronavirus outbreaks.
The European car rental company, Sixt, has been looking to expand in the US and could be a logical applicant, sources said. Sixt could also try to buy the Hertz trademark from bankruptcy at a much lower cost, sources added.
