Hertz picks Knighthead, Certares and Apollo to fund bankruptcy exit

(Reuters) -Hertz Global said on Wednesday it had chosen a proposal from Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management LP to fund the U.S. car rental's exit from bankruptcy.

The proposal, which offers to pay off all creditors in full, is subject to the approval of the bankruptcy court at a hearing on May 14, the company said.

Knighthead, Certares and Apollo have been in a bidding war with other companies to provide equity capital to Hertz.

Hertz filed for bankruptcy protection in May last year after travel demand sank during the height of the COVID-19 pandemic and talks with creditors failed to provide relief.

Under the proposal, Hertz will be funded through direct common stock investments for a total of $2.781 billion, the issuance of $1.5 billion of new preferred stock to Apollo, and a rights offering to existing shareholders to purchase $1.635 billion of additional common stock.

The plan includes $239 million of cash, common stock representing 3% of the reorganized company's shares and 30-year warrants for 18% of the common stock with a strike price based on a total equity value of $6.5 billion.

"We look forward to implementing our Chapter 11 plan, which will substantially strengthen our financial structure by eliminating 79% of our corporate debt," Chief Executive Paul Stone said.

"We are well-positioned to take advantage of increasing global travel demand and new long-term growth opportunities."

Hertz's reorganization plan is scheduled for a court hearing on June 10.

Bloomberg had earlier reported news of the funding.

(Reporting by Ankit Ajmera and Sanjana Shivdas in Bengaluru; Editing by Shinjini Ganguli)

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