Item 7.01 Regulation FD Disclosure.
On
The Debtors filed with the
The Debtors filed a proposed Third Amended Joint Chapter 11 Plan of
Reorganization of the Debtors, dated as of
The information contained in this Item 7.01 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.
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
The Supplemental Disclosure, which remains subject to approval of the
2 The Auction
In light of the continued interest from two alternative potential plan
sponsorship groups, on
In accordance with the Bidding Procedures Order, the Debtors received a plan
proposal from the Proposed Plan Sponsors on
The Best and Final Proposal from the Prior Plan Sponsor
During the Auction, the Prior Plan Sponsors submitted to the Debtors several proposals to sponsor a plan of reorganization for the Debtors and, ultimately, a "best and final" proposal (the "Prior Plan Sponsors' Best and Final Proposal"). The Prior Plan Sponsors' Best and Final Proposal improved upon their proposal embodied in the Prior Plan, and included the following material elements:
· The Prior Plan Sponsors proposed to fund the Prior Plan Sponsors' Best and
Final Proposal as follows:
o Approximately
Company by the Prior Plan Sponsors at a per share price based on a discount to
the equity value of the Prior Plan Sponsors' Best and Final Proposal;
o
for the common stock to be purchased by the Prior Plan Sponsors, i.e., at a
discount to the equity value of the Prior Plan Sponsors' Best and Final
Proposal) pursuant to the rights offering, which the Prior Plan Sponsors had
committed to ensure would have been fully funded pursuant to the terms of the
prior Equity Purchase and Commitment Agreement with certain of the Prior Plan
Sponsors dated as of
o
§ which preferred stock (a) would have a dividend compounded quarterly at 3% per
annum for the first three years after issuance, payable in kind, (b) would have
had a conversion price based on a pre-conversion equity valuation of
billion, (c) would not have been redeemable for the first three years (except
in connection with certain change of control transactions), (d) would have
generally voted on an as-converted basis with shares of common stock, and
(e) would have been mandatorily convertible after the first anniversary of
issuance based on a volume weighted average trading price formula; and
3
o
· Pursuant to the Prior Plan Sponsors' Best and Final Proposal, such cash
proceeds would have been used, in part, to provide the following distributions
to the Company's stakeholders:
o allowed administrative, priority and secured claims would have been paid in
cash in full;
o the holders of claims with respect to the unsecured senior notes and holders of
claims with respect to the letter of credit facility provided pursuant to the
ALOC Credit Agreement, dated as of
lenders party thereto, and
agent and issuing lender (together with the senior notes, the "Unsecured Funded
Debt") which were allowed would have received approximately 47.1% of the common
stock in the reorganized Company and subscription rights for the rights
offering;
o the holders of the Company's €725 million European vehicle debt would have been
paid in cash in full;
o each holder of an allowed general unsecured claim would have received cash
payments of the greater of (i) its pro rata share of
aggregate up to 100% of the allowed amount of such general unsecured claim and
(ii) eighty-two percent (82%) of the allowed amount of such general unsecured
claim; and
· Pursuant to the Prior Plan Sponsors' Best and Final Proposal, the Company's
existing equity would have been cancelled and existing equity holders would have received their pro rata share of (i) new ten-year warrants to purchase, in the aggregate, 14% of the reorganized Company's common stock, subject to certain conditions, with an exercise price to be determined based on an equity value of the Company of$8 billion , (ii) cash of$175 million and (iii)$250 million of cumulative perpetual non-convertible preferred stock with a dividend rate of 7.25%. The Proposed Plan
During the Auction, the Proposed Plan Sponsors submitted the Proposed Plan to the Debtors, along with related transaction documents (the "Transaction Documents"). Pursuant to the Proposed Plan and the Transaction Documents:
· The Proposed Plan will be funded as follows:
o
Company by certain affiliates of the Proposed Plan Sponsors and certain other
parties that have committed to purchase such common stock, pursuant to a new
equity purchase and commitment agreement included in the Transaction Documents;
o
offering (the "Rights Offering") which certain of the Proposed Plan Sponsors
and other third parties have committed to ensure is fully subscribed pursuant
to the Transaction Documents;
o
Apollo or other purchasers arranged by Apollo; and
o
· The funds generated by these transactions will be used, in part, to provide the
following distributions to holders of allowed claims:
o allowed administrative, priority and secured claims will be paid in cash in
full;
o the holders of allowed Unsecured Funded Debt claims will be paid in cash in
full;
o the holders of the Company's €725 million European vehicle debt will be paid in
cash in full; and 4
o the holders of allowed general unsecured claims will be paid in cash in full or
have their claims reinstated.
· Holders of existing stock will receive, in the aggregate, their pro rata share
of (i)$239 million in cash (approximately$1.53 per share); (ii) common stock representing 3% of the shares of the reorganized Company (subject to dilution for warrants and a new management incentive plan); and (iii) either (a) a distribution of 30-year warrants for 18% of the shares of common stock of the reorganized Company (subject to dilution by the issuance of shares pursuant to a new management incentive plan) with a strike price based on a total equity value of$6.5 billion , or (b) the opportunity, for eligible stockholders, to subscribe for shares of common stock in the Rights Offering for approximately 35% of the shares of common stock of the reorganized Company (subject to dilution by the issuance of shares pursuant to warrants and a new management incentive plan).
The subscription rights to participate in the Rights Offering proposed to be
provided pursuant to the Proposed Plan and Transaction Documents would offer
eligible existing equity holders the right to purchase common stock at a per
share price based on an equity value of approximately
The preferred stock to be issued and purchased pursuant to the Proposed Plan would be issued at a 2% discount to stated value. Dividends on the preferred stock would be paid in cash as and if declared by the board of directors of the reorganized Company. Any portion of the dividends not paid in cash would automatically accrete to and increase the stated value of the preferred stock. Any failure to pay dividends in cash after the 42 month anniversary of issuance would be a "non-compliance event" subject to the provisions described in the term sheet for the preferred stock which can be found as Exhibit 99.2 to this Form 8-K. The applicable dividend rate would be as follows:
· prior to the second anniversary of issuance, 9% per annum;
· after the second anniversary of issuance and on or prior to the third
anniversary of issuance, for any portion paid in cash, 7% per annum and for any
portion paid as a compounded dividend, 9% per annum;
· after the third anniversary of issuance and on or prior to the 42 month
anniversary of issuance, for any portion paid in cash, 8% per annum and for any
portion paid as a compounded dividend, 10% per annum;
· after the 42 month anniversary of issuance and on or prior to the four year
anniversary of issuance, 9% per annum;
· after the fourth anniversary of issuance and on or prior to the 54 month
anniversary of issuance, 10% per annum;
· after the 54 month anniversary of issuance and on or prior to the five year
anniversary of issuance, 11% per annum;
· after the fifth anniversary of issuance an amount equal to the sum of (a) 13%
per annum and (b) the product of (x) 2% per annum multiplied by (y) the number
of whole years elapsed since the fifth anniversary of issuance; and
· an additional 6% per annum step up when funded corporate indebtedness exceeds
$3.3 billion .
The preferred stock would be redeemable by the reorganized Company at any time at the greater of 100% of its accrued value and an amount necessary to generate a 1.3 times multiple on invested capital. This description of the terms of the preferred stock is not complete and is qualified in its entirety by reference to the term sheet for the preferred stock, which can be found as Exhibit 99.2 to this Form 8-K.
If the
5
This Current Report on Form 8-K is not a solicitation of votes to accept or reject the Proposed Plan. Information contained in the Proposed Plan, the Disclosure Statement, or described in this Current Report on Form 8-K is subject to change, whether as a result of additional amendments or supplements to the Proposed Plan or Disclosure Statement or otherwise. The documents and other information available via website or elsewhere are not part of this Current Report on Form 8-K and shall not be deemed incorporated herein.
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
Item 9.01 Exhibits. (d) Exhibits Exhibit Number Title 99.1 Press Release, datedMay 12, 2021 99.2 Preferred Stock Term Sheet (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K ofHertz Global Holdings, Inc. (File No. 001-37665), as filed onMay 7, 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) 6
© Edgar Online, source