What Happened?
Shares of global car rental company Hertz (NASDAQ: HTZ) fell 1.4% in the afternoon session after the company completed a $425 million offering of senior notes and announced an expected legal settlement payment of over $154 million.
The debt offering, which included the full exercise of the initial purchasers' option to buy an additional $50 million of notes, was seen as a move to strengthen the company's financial position. Hertz's Chief Financial Officer highlighted that the participation of key investors, including Pershing Square, underscored strong confidence in the company. To lessen the impact of potential new shares from the offering, Hertz also entered into capped call transactions. Separately, the company disclosed it expected to receive a settlement payment of approximately $154 million related to an automotive parts antitrust case. These developments were viewed positively as they bolstered the company's cash position and financial flexibility.
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What Is The Market Telling Us
Hertz’s shares are extremely volatile and have had 64 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 3.6% on the news that the company announced it was selling $375 million worth of senior notes in an upsized private offering.
The total amount of the offering was increased from the previously announced $250 million, signaling strong investor interest. Hertz planned to use $300 million of the money raised to pay back or repurchase some of its existing debt that was due in 2026. This move was seen as a way to improve the company's financial health by extending its debt deadlines. The new notes are due in 2030, giving the company more time to manage its finances.
Hertz is up 81.2% since the beginning of the year, but at $6.76 per share, it is still trading 21.8% below its 52-week high of $8.65 from April 2025. Investors who bought $1,000 worth of Hertz’s shares at the IPO in June 2021 would now be looking at an investment worth $250.47.
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