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Hertz: Make-Whole Settlement Offers Discussed
Mark Lightner, Esq. - Head of Special Situations Legal Research, CreditSights
Jory M. Eisenberg, CFA, FRM - Senior Analyst, Special Situations, CreditSights
Todd Duvick, CFA - Head of Autos, CreditSights
EXECUTIVE SUMMARY
- Hertz has disclosed the terms of competing proposals to settle its outstanding make-whole dispute, stemming from the decision of the U.S. Court of Appeals for the Third Circuit requiring Hertz to pay $270 million plus interest to its pre-bankruptcy noteholders.
- Hertz and the noteholders have proposed differing settlement terms, with a large gap in payment timelines, security, and priorities, reflecting concerns over Hertz’s creditworthiness and liquidity.
- Both proposals contemplate $341.1 million in settlement consideration, but Hertz’s proposal includes less upfront cash and $300 million in unsecured debt maturing in 2029, whereas noteholders seek a higher upfront payment and $272.9 million in secured debt maturing by the end of 2025.
- While settlement negotiations continue, the parties are also setting the stage for a litigation schedule in the bankruptcy court to resolve this dispute over the next several months.
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