The New York Stock Exchange initiated proceedings to delist Hertz Global Holdings Inc HTZ on Tuesday following the car rental chain's bankruptcy filing, according to Reuters.
Coronavirus Fuels Hertz Bankruptcy Filing
Economic damage from the coronavirus forced Hertz to file for Chapter 11 bankruptcy Friday after nearly a month of speculation. Between Feb. 20 and May 26, as the pandemic stalled airport business, Hertz’s stock fell from $20.29 to $2.84.
“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings,” the company said in a Friday press release.
“Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action.”
Hertz had already furloughed or laid off around 20,000 employees, replaced its CEO and, according to Reuters, discussed selling more than 30,000 of its 500,000 vehicles per month through the end of 2020 to try to raise about $5 billion. The team failed to find financial relief from creditors and the U.S. government.
Hertz Grabs Carl Icahn's Attention
This isn’t the first time the NYSE has threatened to remove Hertz from the public market. The company received a delisting notice in 2015 for failing to file its 2014 10-K form on time.
Even before the pandemic hit, Hertz had ceded enough market share to ride-sharing services to capture the attention of activist investor Carl Icahn, who claimed nearly 39% ownership when the pandemic started.
The company adopted a turnaround plan. Its efforts accrued about $19 billion in debt, but helped sustain 10 consecutive quarters of year-over-year revenue growth.
What’s Next For Hertz
A bankruptcy filing isn’t necessarily the end of Hertz’s efforts to stay afloat.
“Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the company may seek access to additional cash, including through new borrowings, as the reorganization progresses,” the company's press release said.
The stock, which has been halted since early Tuesday morning, ended Friday's session down 7.49% at $2.84.
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