Bankrupt car-rental firm Hertz’ lenders are proposing a shakeup that would take a newly reorganized company public, report says

hertz
  • Hertz’ lenders are proposing a shakeup that would take a reorganized company public, according to Bloomberg.
  • If Hertz approves the proposal, its planned sale to two investment funds for $4.2 billion would not go through.
  • The creditor group believes Hertz has an enterprise value of $5 billion.
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Hertz‘s unsecured creditors are proposing a restructuring of the car-rental firm that clashes with the company’s plan to exit from bankruptcy via a sale to two investment funds, Bloomberg reported Thursday.

As part of the planned shakeup, the lenders want to convert their holdings in the bankrupt firm into shares of the reorganized company which could be taken public, Bloomberg said, citing sources.

If the proposal is approved by Hertz’ board, the company would no longer go ahead with its planned sale to Knighthead Capital Management and Certares Management for $4.2 billion. Hertz began negotiations with potential buyers in November, according to court documents. 

The creditors view Knighthead’s bid, which values Hertz at $5.85, as too low, Bloomberg reported. They believe Hertz has an enterprise value of $5 billion and could fetch more under the group’s reorganization plan. The proposal hasn’t yet been sent to Hertz and terms aren’t fixed as yet.

Hertz did not immediately respond to Insider’s request for comment.

Among options being considered, Hertz’ stock would become public upon its exit from bankruptcy, according to Bloomberg. The company’s creditor group counts Alliance Bernstein, Bank of America, Invesco, Fir Tree Partners, and JPMorgan Asset Management among its members.

Hertz, one of the first so-called “meme stocks” in Reddit’s Wall Street Bets subreddit, gained immense popularity as its stock price grew tenfold in a matter of weeks last year. In mid-2020, the company looked to cash in on the interest compounded by the hive mind of the community. But the market eventually soured and it ultimately delisted in October. 

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The last 2 Toys ‘R’ Us stores in the US have closed down after the COVID-19 pandemic hit sales

tru kids
A rendering of a redesigned Toys ‘R’ Us store, from owner Tru Kids.

The last two Toys ‘R’ Us stores in the US have reportedly closed, bringing to an end a two-year effort to re-establish the onetime behemoth’s retail footprint. 

The Toys ‘R’ Us brand, purchased in 2019 by Tru Kids, will reportedly continue as an online retailer. The brand is active on Twitter, YouTube, and other social channels, but its retail effort was hindered by the rise of COVID-19, according to CNBC

“Consumer demand in the toy category and for Toys ‘R’ Us remains strong and we will continue to invest in the channels where the customer wants to experience our brand,” a Tru Kids spokesperson told CNBC.

The final stores were in Texas and New Jersey, Bloomberg reported on Friday. 

toys r us founder
Toys ‘R’ Us founder Charles Lazarus.

After its first store opened in 1957, Toys ‘R’ Us grew into a national chain of more than 700 US locations. In the 1980s and 1990s, the company’s ads saturated children’s TV, saying, “I don’t wanna grow up, I’m a Toys ‘R’ Us kid.” 

 

It filed for Chapter 11 bankruptcy protection in September 2017.

At the time, the company placed some blame on Amazon, Walmart, and Target, saying online retailers had created a “perfect storm” that drove Toys ‘R’ Us into bankruptcy. 

The following March, it told employees it would be closing all retail locations in the US. Its UK arm also announced plans to liquidate its business, closing about 100 stores. 

Read more: A ‘tsunami’ of retail bankruptcies is about to sweep the US and drown courts in Chapter 11 filings, lawyer says

In February 2019, newly formed Tru Kids said it planned to revive the brand. In July 2019, the company opened new locations in Houston, Texas, and Paramus, New Jersey. 

The Houston store closed on January 15, and the New Jersey store closed on Tuesday, The Associated Press reported.

In 2020, the renewed company relaunched its website in partnership with Amazon.

Tru Kids didn’t immediately respond to a request for comment on Saturday. 

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