Item 1.01 Entry into a Material Definitive Agreement.
On May 22, 2020 (the "Petition Date"), Hertz Global Holdings, Inc. (the
"Company", "HGH" 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 Debtors filed
with the Bankruptcy Court a proposed Joint Chapter 11 Plan of Reorganization of
the Debtors, dated as of March 1, 2021, and a related proposed Disclosure
Statement. The Debtors subsequently filed with the Bankruptcy Court a proposed
First Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a
related proposed Disclosure Statement, in each case dated as of March 29,
2021. On April 3, 2021, the Debtors filed with the Bankruptcy Court a proposed
Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors (the
"Proposed Plan") and a related proposed form of Disclosure Statement (the
"Proposed Disclosure Statement"). On April 3, 2021, the Company issued a press
release announcing the filing of the Proposed Plan and Proposed Disclosure
Statement. A copy of the press release is furnished as Exhibit 99.1 to this
current report and is hereby incorporated by reference into this Item 1.01. The
information contained in this Item 1.01 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.
In connection with the Proposed Plan the Debtors entered into a Plan Support
Agreement, dated as of April 3, 2021 (the "Plan Support Agreement"), with one or
more funds associated with Warburg Pincus LLC ("WP"), Centerbridge Partners L.P.
("Centerbridge") and Dundon Capital Partners LLC ("Dundon" and together with WP
and Centerbridge, the "PE Sponsors") and certain other parties in their capacity
as owners, beneficial owners or managers or advisors of funds or accounts that
are beneficial owners, of claims in respect of the following obligations of the
Company (the "Initial Consenting Noteholders" and, together with the PE
Sponsors, the "Plan Sponsors"): (a) the 6.25% Senior Notes due 2022 issued
pursuant to that certain indenture (as the same may have been amended, modified,
or supplemented from time to time), dated as of October 16, 2012, by and among
THC, as the issuer, the subsidiary guarantors party thereto, and Wells Fargo
Bank, N.A., in its capacity as trustee; (b) the 5.50% Senior Notes due 2024
issued pursuant to that certain indenture (as the same may have been amended,
modified, or supplemented from time to time), dated as of September 22, 2016, by
and among THC, as the issuer, the subsidiary guarantors party thereto, and Wells
Fargo Bank, N.A., in its capacity as trustee; (c) the 7.125% Senior Notes due
2026 issued pursuant to that certain indenture (as the same may have been
amended, modified, or supplemented from time to time), dated as of August 1,
2019, by and among THC, as the issuer, the subsidiary guarantors party thereto,
and Wells Fargo Bank, N.A., in its capacity as trustee; (d) the 6.00% Senior
Notes due 2028 issued pursuant to that certain indenture (as the same may have
been amended, modified, or supplemented from time to time), dated as of November
25, 2019, by and among THC, as the issuer, the subsidiary guarantors party
thereto, and Wells Fargo Bank, N.A., in its capacity as trustee; and (e) the
obligations under that certain Credit Agreement, dated as of December 13, 2019,
by and among THC, the lenders party thereto, and Goldman Sachs Mortgage Company,
as administrative agent and issuing lender, as amended, supplemented, or
otherwise modified from time to time (the claims under clauses (a) through (e)
above, collectively, the "Senior Notes/ALOC Claims" and, the holders thereof,
the "Unsecured Noteholders").
Pursuant to the Plan Support Agreement, the parties thereto have agreed to take
certain actions to support the prosecution and consummation of the Proposed Plan
on the terms and conditions set forth in the Plan Support Agreement. The Plan
Support Agreement also includes a "fiduciary out" provision that makes clear, to
the extent set forth in the Plan Support Agreement, that the Debtors are not
required to take any action or to refrain from taking any action with respect to
the Plan Support Agreement to the extent taking or failing to take such action
would be inconsistent with applicable law or the fiduciary obligations of the
Debtors' boards of directors (or similar governing body) under applicable law.
The Plan Support Agreement contemplates that additional parties, including the
official committee of unsecured creditors appointed in the Chapter 11 Cases and
certain holders of claims against or interests in any of the Debtors, may join
the Plan Support Agreement by executing one or more joinders thereto. Among
other things, the Plan Support Agreement establishes certain milestones for the
prosecution and consummation of the Proposed Plan, including fixing (i) May 1,
2021 as the outside date for obtaining approval of the Proposed Disclosure
Statement, (ii) June 30, 2021 as the outside date for obtaining confirmation of
the Proposed Plan, and (iii) July 31, 2021 as the outside date for consummating
the Proposed Plan (in each case subject to the right of the Plan Sponsors to
extend in their discretion).
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The Debtors also entered into an Equity Purchase and Commitment Agreement, dated
as of April 3, 2021 (the "Equity Purchase and Commitment Agreement"). Pursuant
to the Equity Purchase and Commitment Agreement, each PE Sponsor identified as
the Direct Equity Investors on Schedule 1 of the Equity Purchase and Commitment
Agreement agreed to purchase directly 15,400,000 shares of Series A Convertible
Preferred Stock of reorganized HGH for $385 million and 116,575,894 shares of
common stock of reorganized HGH for $565 million. Pursuant to the Equity
Purchase and Commitment Agreement, the Parties identified on Schedule 1 to of
the Equity Purchase and Commitment Agreement that have a percentage set forth
across from such party on such Schedule 1 in the column labeled "Additional
Investor Equity Commitment" (subject to certain transfer provisions) agreed to
backstop the purchase of $1.623 billion in shares of common stock of reorganized
HGH pursuant to the offering of rights pursuant to which eligible holders of the
Senior Notes/ALOC Claims are entitled to receive rights to subscribe for shares
of common stock of reorganized HGH
The foregoing summary of the Plan Support Agreement and the Equity Purchase and
Commitment Agreement has been included to provide investors and security holders
with information regarding the terms of such agreements and is qualified in its
entirety by the terms and conditions of the Plan Support Agreement and the
Equity Purchase and Commitment Agreement, copies of which are attached hereto as
Exhibits 10.1 and 10.2, which are incorporated herein by reference. The
representations, warranties and covenants contained in the Plan Support
Agreement and the Equity Purchase and Commitment Agreement have been made solely
for the purpose of such agreement and as of specific dates, for the benefit of
the parties thereto. In addition, such representations, warranties and covenants
(i) may have been qualified by confidential disclosures exchanged between the
parties, (ii) are subject to materiality qualifications contained in the
agreements which may differ from what may be viewed as material by investors,
and (iii) have been included in the agreements for the purpose of allocating
risk between the contracting parties rather than establishing matters of fact.
Investors should not rely on the representations, warranties and covenants or
any descriptions thereof as characterizations of actual facts or circumstances,
and the subject matter of representations and warranties may change after the
date as of which such representations or warranties were made. Moreover,
information concerning the subject matter of the representations, warranties and
covenants may change after the date of the agreements, which subsequent
information may or may not be fully reflected in the Company's public
disclosures. The Proposed Plan, Plan Support Agreement and the Equity Purchase
and Commitment Agreement are subject to approval by the Bankruptcy Court.
Item 8.01 Other Events.
As previously disclosed, on the "Petition Date", the Debtors filed voluntary
petitions for relief under Chapter 11 of the United States Code in the
Bankruptcy Court, thereby commencing 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 April 3, 2021, the Debtors filed the Proposed Plan and the related Proposed
Disclosure Statement describing, among other things, the Proposed Plan; the
Debtors contemplated financial restructuring (the "Restructuring"); the events
leading to the Chapter 11 Cases; certain events that have occurred or are
anticipated to occur during the Chapter 11 Cases, including the anticipated
solicitation of votes to approve the Proposed Plan from certain of the Debtors'
creditors and certain other aspects of the Restructuring. The Proposed Plan and
Proposed Disclosure Statement, as well as other court filings and information
about the Chapter 11 Cases, can be accessed free of charge at a website
maintained by the Company's claims, noticing, and solicitation agent, Prime
Clerk LLC, at https://restructuring.primeclerk.com/hertz, or call (877) 428-4661
(toll-free in the U.S.) or (929) 955-3421 (from outside the U.S.).
Neither the Debtors' filing of the Proposed Plan and Proposed Disclosure
Statement, nor this Current Report, is a solicitation of votes to accept or
reject the Proposed Plan. Votes on the Proposed Plan may not be solicited until
a disclosure statement has been approved by the Bankruptcy Court. Any such
solicitation will be made pursuant to and in accordance with applicable law,
including orders of the Bankruptcy Court. The Proposed Disclosure Statement is
being submitted to the Bankruptcy Court for approval but has not been approved
by the Bankruptcy Court to date.
Information contained in the Proposed Plan and the Proposed Disclosure Statement
is subject to change, whether as a result of amendments or supplements to the
Proposed Plan or Proposed Disclosure Statement, third-party actions, or
otherwise, and should not be relied upon by any party. The documents and other
information available via website or elsewhere are not part of this Current
Report and shall not be deemed incorporated herein.
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Cautionary Statement Concerning Forward-Looking Statements
This Current Report 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 and potential financing sources;
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 Chapter 11 on the
interests of various constituents; and the ability to 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, 2020, as filed with the Securities and
Exchange Commission on February 26, 2021, 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 their date, and we undertake no obligation to update this
information.
Item 9.01 Exhibits.
(d) Exhibits
Exhibit
Number Title
10.1 Plan Support Agreement, dated as of April 3, 2021
10.2 Equity Purchase and Commitment Agreement, dated as of April 3, 2021
99.1 Press Release of Hertz Global Holdings, Inc. and The Hertz
Corporation, dated April 3, 2021
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 and included in Exhibit 101.1)
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