Hertz Global Holdings plans to offer $100 million of common stock through a share loan to J.P. Morgan Securities, with no proceeds going to the company.
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Hertz offers $100 million in stock as part of debt-linked share loan
Hertz Global Holdings plans to offer $100 million of common stock through a share loan to J.P. Morgan Securities, the rental car company said Wednesday.
The shares will be loaned to J.P. Morgan Securities, acting as share borrower and underwriter, under a share lending agreement, Hertz said in a statement. The offering is contingent on a concurrent private placement of exchangeable senior first-lien secured PIK notes due 2030 by Hertz's wholly owned subsidiary, the Hertz Corp.
Neither Hertz nor the Hertz Corp. will receive any proceeds from the stock sale. J.P. Morgan Securities or its affiliates will keep all proceeds, paying Hertz only a nominal lending fee. The share borrower must return identical shares to Hertz under the terms of the agreement.
J.P. Morgan Securities intends to sell the borrowed shares and use the resulting short position to facilitate hedging transactions by investors in the notes offering, according to the statement. The activity could affect the market price of Hertz common stock.
The offering comes as Hertz operates more than 11,000 rental locations across 160 countries under the Hertz, Dollar, Thrifty and Firefly brands. The company also runs Hertz Car Sales and the Hertz 24/7 car-sharing business in Europe.
The stock offering dilutes existing shareholders while providing no direct capital to the company. Investors will watch the pricing of the concurrent notes offering for signals about Hertz's financing costs and the final terms of the share loan.
This article is for informational purposes only and does not constitute investment advice.
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