Hertz Raises $949 Million in Public Offering and Private Placements

May 29, 2009
Hertz Global Holdings last week said it raised gross proceeds of $749 million in its dual equity and convertible senior notes public offerings. Also, Clayton Dubilier & Rice, and the Carlyle Group, both existing Hertz stockholders, have agreed to purchase $200 million of Hertz common stock in a private placement expected to close in June.

Hertz Global Holdings last week said it raised gross proceeds of $749 million in its dual equity and convertible senior notes public offerings. Also, Clayton Dubilier & Rice, and the Carlyle Group, both existing Hertz stockholders, have agreed to purchase $200 million of Hertz common stock in a private placement expected to close in June.

The $949 million of gross proceeds exceeded the company’s pre-offering target by almost $250 million. The aggregate net proceeds of the offerings and the private placement are estimated to be about $923 million after deducting underwriting discounts and commissions, and offering expenses payable by Hertz.

Hertz said the proceeds of the offering and private placement provide cash to support 2010 debt refinancing while maintaining liquidity to fund growth initiatives. Using cash to retire debt will reduce the overall cost of fleet debt and lower fleet interest expense, which will benefit corporate EBITDA.

“We are pleased the equity and debt offerings were well received by the market, including by current investors and investors that had previously not held a substantial position in our equity or debt, and that two of our founding private equity owners have committed to making a major additional investment in the company,” said Hertz chairman and CEO Mark Frissora.

“Both facts, we believe, demonstrate confidence in our near and long-term prospects, and the offering benefits both the company’s investors and creditors. Also, the offerings and the private placement demonstrate, in addition to last September’s $825 million VFN financing and the successful $150 million debt buyback initiative earlier this year, Hertz’s financial strength and flexibility.”

In addition to Hertz car rental, Hertz Global Holdings, Park Ridge, N.J., owns Hertz Equipment Rental Corp., No. 4 on the RER 100.