May 5, 2020 / 4:26 PM / 25 days ago

Car rental firm Hertz gets more time from lenders to avoid bankruptcy

May 5 (Reuters) - Struggling car rental company Hertz Global Holdings Inc said on Tuesday its lenders have extended the deadline for certain loan repayments, giving it more time to come up with a financing plan to avoid a possible bankruptcy.

The deadline has now been extended until May 22, the company said in a filing. The earlier deadline was May 4 and it has been in talks with the lenders after skipping a payment that was due April 27.

Hertz said it will talk to stakeholders to draw up a strategy that would account for the economic impact of COVID-19 pandemic and its cash needs.

The Estero, Florida-based company, whose largest shareholder is billionaire investor Carl Icahn with 38.9% stake as of March 11, is reeling from the impact of the health crisis on global travel.

Last month, it decided to lay off 10,000 employees across its North America operations from a workforce that totaled 38,000 at 2019 end and enlisted restructuring experts to address a cash crunch that made its $17 billion debt potentially unsustainable.

Hertz’s preparations for a possible bankruptcy have been accelerating, Reuters reported last week.

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

"In light of the impact of the COVID-19 global pandemic on the travel industry, Hertz believes it will not need to acquire new vehicles for its fleet through the remainder of 2020," Hertz said in the filing bit.ly/35z3q49.

“While Hertz has taken aggressive action to eliminate costs, it faces significant ongoing operating expenses.”

Shares of Hertz, which fell as much as 22% earlier in the day after a report said the company was preparing for a bankruptcy filing, pared some losses and were down about 14.2% in afternoon trading. (Reporting by Sanjana Shivdas in Bengaluru; Editing by Arun Koyyur)

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