Hertz Global Holdings Inc. agreed to provide some value to shareholders upon exiting Chapter 11, justifying the individual traders who have insisted that the company is worth something despite the bankruptcy filing.
Hertz proposed in a Chapter 11 exit plan on Wednesday that current shareholders receive warrants to buy up to 4% of the restructured business, the first time the company said it is worth enough to return some value to the owners.
The shareholder split would amount to a recovery of 60 to 70 cents per share, a “substantial return to equity,” Hertz attorney Thomas Lauria said in a court hearing Wednesday.
If approved by the U.S. Bankruptcy Court in Wilmington, Del., That outcome would make Hertz a relative rarity in corporate bankruptcies, in which equity is behind debt and usually wiped out. Hertz shares closed at $ 1.74 on Wednesday, down 8.4% on the day, but up 36% since the start of the year.
The proposed equity allocation is part of a restructuring proposal from Dundon Capital Partners LLC, Centerbridge Partners LP and Warburg Pincus LLC, selected by Hertz earlier this month following a competitive process to fund the company’s Chapter 11 exit.