Car-Rental Firm Hertz Reportedly Seeks $700M Lifeline As EV Strategy Stalls

Car rental service Hertz Global Holdings Inc HTZ is reportedly contemplating selling $700 million in secured debt, coupled with a convertible notes offering.

What Happened: The car rental company is seeking to enhance its financial position and contacting potential investors on the secured debt issue, Bloomberg reported, citing people familiar with the matter.

Despite the ongoing discussions, no final decisions have been made, and the specifics of the financing, including the size, are subject to change, the report added.

Hertz did not immediately respond to Benzinga’s request for comment.

The move comes after Hertz faced significant financial strain due to its electric vehicle venture. For the first quarter, Hertz reported an adjusted loss of $1.28 per share, much higher than the analyst consensus estimate of a loss of 44 cents.

Why It Matters: The company is now looking to remove 30,000 electric vehicles from its fleet, significantly higher than the number announced earlier this year, as their repair and operating costs proved too high to eke out profits.

"We're tackling both issues – getting to the right supply of vehicles at an acceptable capital cost while at the same time driving productivity up and operating costs down," Hertz CEO Gil West said in April.

As of the end of the first quarter, the company had already sold about 10,000 EVs on which it incurred vehicle depreciation costs of $195 million.

Jody Lurie, a senior credit analyst at Bloomberg Intelligence, noted that Hertz’s issues are cost-related, not revenue-related. She believes that a potential debt sale could help bridge the cash gaps as the company addresses its fleet issues.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Read More: Chinese Automakers Surge In UK As Tesla, Ford Sputter: BYD Leads 2,700% Sales Increase In May

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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