Hertz Global Holdings (OTCMKTS: HTZGQ) is among the most exciting stories in small caps that has exploded up the charts from all-time lows of $0.40 shortly after hitting the pinks after being delisted by the NYSE to recent highs over $1.30 per share as the Company has secured over $5 billion in new funding.
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Hertz Global Holdings (OTCMKTS: HTZGQ) operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin American, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. Hertz was recently ranked No. 1 overall ranking for Customer Satisfaction in the J.D. Power 2020 North America Rental Car Satisfaction Study, which surveys leisure and business customers. Hertz also received top honors in the following categories: reservation process, pick-up process and rental car, which includes satisfaction with the overall vehicle and its cleanliness.
Earlier this year Hertz filed for Chapter 11 with nearly $20 billion in debt. Since than Hertz has secured commitments for debtor-in-possession (“DIP”) financing totaling $1.65 billion and has filed a motion for approval of the financing by the U.S. Bankruptcy Court for the District of Delaware. The proposed DIP financing will support the Company as it moves through its next stage of its Chapter 11 process. The financing is to be provided by certain of the Company’s pre-petition first-lien lenders and is expected to be structured as a delayed draw term loan debtor facility. This has been followed by the WSJ reporting Hertz has secured another $4 bilion on top of the 1.65 billion to carry itself through bankruptcy.
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On November 5 Hertz announced that it has secured commitments for fleet financing totaling $4 billion and has filed a motion for approval of The Hertz Corporation entering into the documentation for the financing by the U.S. Bankruptcy Court for the District of Delaware. Upon approval, and together with the up to $1 billion of Hertz’s debtor-in-possession financing that may be used for equity in the fleet financing subsidiary, Hertz will have access to up to $5 billion in total funding to support its fleet financing needs.
Hertz plans to refresh its rental car fleet in 2021 and anticipates the purchase of approximately 229,000 vehicles. To execute that plan, Hertz will create a newly-formed special purpose entity that will be a direct wholly-owned subsidiary of The Hertz Corporation. Athene USA Corporation, an affiliate of Apollo Capital Management, L.P., committed to provide the new subsidiary the proposed $4 billion financing, and it is expected to be structured as an asset-backed securitization short-term facility. The Company expects to begin placing orders for deliveries of new vehicles that would commence in the first quarter of 2021. The new fleet financing is subject to the Bankruptcy Court’s approval of the entry into certain documentation necessary for the financing and other customary conditions, with a hearing scheduled for November 24, 2020.
Hertz President and CEO Paul Stone said, “This new $4 billion financing provides us with an efficient and cost-effective way to maintain a robust and competitive fleet with new cars that appeal to our customers and enables Hertz to continue delivering an industry-leading experience which has earned Hertz two consecutive No. 1 rankings by J.D. Power for Rental Car Customer Satisfaction. We appreciate Apollo’s support as we continue taking steps to best position our business as a rental car leader through the pandemic and for the future.”
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Currently running northbound in a hurry HTZGQ is an exciting story in small caps quickly making waves since hitting the pinksheets on October 30 after the NYSE determined that Hertz was no longer suitable for listing following the Company’s May 22, 2020 Chapter 11 filing and its review of the Company’s appeal of the delisting. Penny stock speculators are all too familiar with the spectacular runs many of these big boards make in bankruptcy after hitting the OTCQB and there is certainly huge potential for HTZGQ now that they have secured over $5 billion in funding to buy a new fleet of cars. Some of the most historic q runners in recent years are WAHUQ, LEHKQ and LEHLQ and we have covered many of them. We will be updating on HTZGQ when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with HTZGQ.
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Disclosure: we hold no position in HTZGQ either long or short and we have not been compensated for this article.