Hertz Global Holdings, Inc.’s Chapter 11 Plan of Reorganization

Paul, Weiss advised funds and accounts managed by affiliates of Apollo Capital Management, L.P. in a joint proposal, alongside Knighthead Capital Management LLC and Certares Opportunities LLC, to sponsor Hertz Global Holdings, Inc.’s chapter 11 plan of reorganization and to fund Hertz’s and its affiliates’ exit from bankruptcy. White & Case LLP and Walkers Ireland LLP advised Hertz Global Holdings.

The bankruptcy court approved the proposal, after Apollo and the other plan sponsors submitted the winning bid in an auction, which lasted approximately 30 hours over two days.

The proposal includes the issuance of $1.5 billion of new preferred stock to Apollo, direct common stock investments by the plan sponsors and other parties totaling $2.781 billion, and a fully backstopped rights offering open to Hertz’s existing shareholders and unsecured noteholders to purchase $1.635 billion of common stock. Hertz will also enter into a $1.3 billion term loan facility and a $1.5 billion exit revolving credit facility to fund the transactions. The plan will provide for the payment in full in cash of all creditor claims and will deliver significant value to Hertz’s existing shareholders, including $239 million of cash; common stock representing 3% of the shares of reorganized Hertz; and 30-year warrants for 18% of the common stock of reorganized Hertz, with a strike price based on a total equity value of $6.5 billion, or in lieu of warrants, the opportunity for eligible shareholders to subscribe for shares of common stock at plan equity value.

The company officially emerged from bankruptcy, following the confirmation of the company’s reorganization plan on June 10 by the Delaware Bankruptcy Court that presided over the case. Under the Hertz reorganization plan, new investors have provided about US$5.9 billion of new equity capital and the company has raised about US$2.8 billion of new corporate financing on favorable terms, including an undrawn US$1.25 billion revolver, and successfully placed US$7 billion of new ABS financing with an all-in yield of less than 2 percent. The transaction results in a materially strengthened business, providing the company with the global liquidity needed to fuel its future growth, while reducing corporate debt by about US$5 billion. All creditors are being paid in cash, in full, and shareholders are receiving cash, stock and warrants valued at US$7 to US$8 per share.

Hertz Global Holdings, Inc., together with its subsidiaries, provides airport and off airport vehicle rental and leasing services. It operates through three segments: U.S. RAC, International RAC, and All Other Operations

The Paul, Weiss team included corporate partners John Scott (Picture), Gregory Ezring, Tracey Zaccone and Brian Janson and counsel David Levine; tax partners Brad Okun and Brian Grieve; intellectual property partner Charles Googe; litigation partners Lewis Clayton and Andrew Ehrlich and  counsel Steven Herzog; restructuring partners Jeffrey Saferstein and Kyle Kimpler; and real estate partner Peter Fisch.

White & Case LLP advised Hertz Global Holdings with a team led by partner Thomas Lauria in Miami, and included partners Gregory Pryor, Adam Cieply, David Thatch, Chris Shore, Eric Leicht, David Bilkis, David Johansen, David Dreier,  David Turetsky, Andrew Zatz and Elizabeth Devine, and Henrik Patel and counsel Kenneth Barr and associates Andrea Amulic, Caitlin Colesanti, Steven Schwartz, Sam Hershey, Kathryn Sutherland-Smith, Erin Smith, Kathrin Schwesinger and Livy Mezei (all in New York); partner Matthew Brown, counsel Fan He and associates Eitan Goldberg, Cecilia Walker and Gregory Warren (all in Miami);  partner Jason Zakia and counsel Laura Baccash (both in Chicago); partners Roberto Kampfner, Ronald Gorsich and Brenda Dieck, and associates Aaron Colodny, Andrew Mackintosh, Doah Kim and RJ Szuba (all in Los Angeles); partner A.J. Ericksen and associate Hannah Craft (both in Houston); and partners Ian Wallace, James Greene, Morvyn Radlow and Tom Falkus and associates Sunaina Deol, Ellen Campbell and Suzanne Thomson (all in London).

The Walkers Ireland team was led by Partners William Greensmyth (Restructuring), Jonathan Sheehan (Tax), Andrew Traynor (Finance and Capital Markets) and Brendan O’Brien (Corporate).

Involved fees earner: Lewis Clayton – Paul Weiss Rifkind Wharton & Garrison; Andrew Ehrlich – Paul Weiss Rifkind Wharton & Garrison; Gregory Ezring – Paul Weiss Rifkind Wharton & Garrison; Peter Fisch – Paul Weiss Rifkind Wharton & Garrison; Charles Googe – Paul Weiss Rifkind Wharton & Garrison; Brian Grieve – Paul Weiss Rifkind Wharton & Garrison; Steven Herzog – Paul Weiss Rifkind Wharton & Garrison; Brian Janson – Paul Weiss Rifkind Wharton & Garrison; Kyle Kimpler – Paul Weiss Rifkind Wharton & Garrison; David Levine – Paul Weiss Rifkind Wharton & Garrison; Brad Okun – Paul Weiss Rifkind Wharton & Garrison; Jeffrey Saferstein – Paul Weiss Rifkind Wharton & Garrison; John Scott – Paul Weiss Rifkind Wharton & Garrison; Tracey Zaccone – Paul Weiss Rifkind Wharton & Garrison; William Greensmyth – Walkers Global; Brendan O’Brien – Walkers Global; Jonathan Sheehan – Walkers Global; Andrew Traynor – Walkers Global; Andrea Amulic – White & Case; Laura Baccash – White & Case; Kenneth Barr – White & Case; Matthew Brown – White & Case; Caitlin Colesanti – White & Case; Aaron Colodny – White & Case; Hannah Craft – White & Case; Elizabeth Devine – White & Case; Brenda Dieck – White & Case; A.J. Ericksen – White & Case; Tom Falkus – White & Case; Eitan Goldberg – White & Case; Ronald Gorsich – White & Case; James Greene – White & Case; Fan He – White & Case; Sam Hershey – White & Case; Roberto Kampfner – White & Case; Doah Kim – White & Case; Andrew Mackintosh – White & Case; Livy Mezei – White & Case; Henrik Patel – White & Case; Morvyn Radlow – White & Case; Steven Schwartz – White & Case; Kathrin Schwesinger – White & Case; Erin Smith – White & Case; Kathryn Sutherland-Smith – White & Case; RJ Szuba – White & Case; Suzanne Thomson – White & Case; Cecilia Walker – White & Case; Ian Wallace – White & Case; Gregory Warren – White & Case; Jason Zakia – White & Case;

Law Firms: Paul Weiss Rifkind Wharton & Garrison; Walkers Global; White & Case;

Clients: Apollo Global Management; Hertz;

Author: Martina Bellini