Item 7.01 Regulation FD Disclosure
As previously disclosed, on May 22, 2020, Hertz Global Holdings, Inc. (the
"Company" or "we"), The Hertz Corporation ("THC") and certain of their direct
and indirect subsidiaries in the United States and Canada (collectively, the
"Debtors") filed voluntary petitions for relief under chapter 11 of title 11
("Chapter 11") of the United States Code in the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"), thereby commencing
Chapter 11 cases (the "Chapter 11 Cases") for the Debtors. The cases are being
jointly administered under the caption "In re The Hertz Corporation, et al.,
Case No. 20-11218 MFW."
On June 11, 2020, the Debtors filed a Motion for Order Rejecting Certain
Unexpired Vehicle Leases Effective Nunc Pro Tunc to June 11, 2020 Pursuant to
Sections 105 and 365(a) of the Bankruptcy Code [Docket No. 390] (the "Rejection
Motion"). Certain institutions that are, directly or indirectly, beneficial
holders of medium-term notes ("MTN Holders") issued by the Debtors' non-Debtor
vehicle finance subsidiary are among the parties that have contested the
Rejection Motion. To facilitate discussions with the MTN Holders, certain of the
Debtors entered into confidentiality agreements with certain of the MTN Holders
that require the Company to publicly disclose certain information provided to
those MTN Holders (the "Cleansing Materials") upon the occurrence of certain
events. The Company is furnishing the Cleansing Materials as Exhibit 99.1
hereto.
The Cleansing Materials contain discussion materials related to the impact of
the COVID-19 pandemic and general economic conditions on the Company's financial
condition and results of operations, including certain financial forecasts. The
Cleansing Materials are based solely on information available to the Company as
of the date of the Cleansing Materials. The economic environment in which the
Company and its subsidiaries are operating, including the used vehicle sale
market, has been subject to rapid and dramatic changes as a result of the
COVID-19 pandemic and there is an even higher degree of uncertainty surrounding
forecasts than would be the case in a normal operating environment. Therefore,
it is possible that actual performance and results will differ from the
forecasts contained in the Cleansing Materials and such differences may be
material. Any financial projections or forecasts included in the Cleansing
Materials were not prepared with a view toward public disclosure or compliance
with the published guidelines of the U.S. Securities and Exchange Commission.
The Cleansing Materials do not purport to present the Company's financial
condition in accordance with accounting principles generally accepted in the
United States. The Company's independent accountants have not examined, compiled
or otherwise applied procedures to the Cleansing Materials and, accordingly, do
not express an opinion or any other form of assurance with respect to the
Cleansing Materials or any projections contained therein. The inclusion of the
Cleansing Materials herein should not be regarded as an indication that the
Company or its representatives consider the forecasts or projections contained
therein to be a reliable prediction of future events, and such forecasts and
projections should not be relied upon as such.
The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be
deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and shall not be incorporated by
reference into any filings under the Securities Act of 1933, as amended, or the
Exchange Act, except as may be expressly set forth by specific reference in such
filing.
Cautionary Statement Concerning Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of federal securities laws. Words such as "expect" and "intend" and
similar expressions identify forward-looking statements, which include but are
not limited to statements related to our liquidity; used vehicle sales and
proceeds; the expected effects on our business, financial condition and results
of operations due to the spread of the COVID-19 virus; the bankruptcy process;
our ability to obtain approval from the Bankruptcy Court with respect to motions
or other requests made to the Bankruptcy Court throughout the course of the
Chapter 11 Cases; the effects of the Chapter 11 Cases, including increased
professional costs, on our liquidity, results of operations and business; our
ability to comply with the continued listing criteria of the New York Stock
Exchange (the "NYSE") and risks arising from the potential suspension of trading
of our common stock on, or delisting from, the NYSE; the effects of Chapter 11
on the interests of various constituents; and the ability to negotiate, develop,
confirm and consummate a plan of reorganization. We caution you that these
statements are not guarantees of future performance and are subject to numerous
evolving risks and uncertainties that we may not be able to accurately predict
or assess, including those in our risk factors that we identify in our most
recent annual report on Form 10-K for the year ended December 31, 2019, as filed
with the Securities and Exchange Commission on February 25, 2020, and any
updates thereto in the Company's quarterly reports on Form 10-Q and current
reports on Form 8-K. We caution you not to place undue reliance on our
forward-looking statements, which speak only as of the date of this filing, and
we undertake no obligation to update this information.
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Item 8.01 Other Events
The Company has reached an interim settlement and agreement to suspend
litigation relating to the Rejection Motion until January 15, 2021, as well as
other issues related to the lease pursuant to which the Debtors lease vehicles
under THC's asset backed vehicle finance facility (the "ABS"). The interim
settlement and agreement is documented in the form of a proposed order of the
Bankruptcy Court (the "Order"), which will be submitted to the Court on July 24,
2020.
The Order contains the following key terms:
· THC in its capacity as servicer, shall dispose of at least 182,521 lease
vehicles between June 1, 2020 and December 31, 2020, inclusive. The proceeds of
the dispositions, subject to certain exclusions set forth in the order, will be
used to repay debt incurred under the ABS;
· THC, in its capacity as lessee, will pay in cash a total of $650 million of
rent in equal monthly installments from July to December, which rent will
result in additional principal payments on the ABS;
· Interest payments on the debt incurred under the ABS will be funded from draws
on certain existing letters of credit, which are reimbursable by the Debtors;
· The Debtors will pay certain reasonable and documented fees and expenses of
advisors to the ABS creditors (including the agent and trustee), as well as
additional fees to the agent under the ABS; and
· Litigation relating to the lease pursuant to which the debtors lease vehicles
under the ABS will be suspended and all parties reserve all rights with respect
to future litigation claims.
The foregoing summary of the Order is qualified in its entirety by the text
thereof, which is attached as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
99.1 Cleansing materials
99.2 Proposed Order of the Bankruptcy Court
101.1 Pursuant to Rule 406 of Regulation S-T, the cover page to this Current
Report on Form 8-K is formatted in Inline XBRL
104.1 Cover Page Interactive Data File (Embedded within the Inline XBRL
document)
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