Hertz in talks with creditors to avoid default, faces May 4 deadline

(Reuters) – Hertz Global Holdings Inc. HTZ.N said Wednesday it was in talks with its lenders to avoid defaulting on debt related to its fleet of rental vehicles, after skipping a payment due on April 27.

Hertz, whose subsidiary Hertz Corp operates rental brands Hertz, Dollar and Thrifty, said in a regulatory filing that it had experienced a “sudden and dramatic negative impact” on its business due to the coronavirus pandemic, which has crushed demand for rental cars as people cancel trips and stay home.

Hertz shares were trading at around $3.71 on Wednesday, down about 20% on the day and down about 80% since late February. Billionaire Carl Icahn owns 38.9% of Hertz.

The Estero, Fla.-based company has been working with debt restructuring advisers to rework its finances, Reuters reported last week. The company’s debt stands at $17 billion.

Hertz said too few lenders have so far accepted its waiver or forbearance request for missed payments. Hertz said it has until May 4 to reach an agreement.

Hertz’s preparations for possible bankruptcy have accelerated, a source familiar with the matter said this week. The source requested anonymity as the deliberations are confidential.

Hertz did not immediately respond to a request for comment.

Hertz also said on Wednesday it had taken “aggressive steps to eliminate costs.” Earlier this month, the company announced it would lay off 10,000 employees as its revenue dries up.

A trade group representing Hertz, the American Car Rental Association, has called on Congress to do more for the industry by expanding a $2.3 trillion stimulus package and advancing new legislation targeting tourism-related businesses. .

Even before the pandemic, Hertz and its peers were under financial pressure as travelers turned to ride-sharing services such as Uber Technologies Inc. UBER.N.

To fight against Uber, Hertz had adopted a recovery plan, aimed at modernizing its smartphone applications and improving its management of its fleet of rental cars.