Hertz Global Holdings has a disappointing debut on Nasdaq.
The shares fell 19.8% on Tuesday to 26.17 dollars after the company increased the size of the share offer on Monday in what it called its “Re-IPO”.
Hertz shares (ticker: HTZ), which switched to Nasdaq from Pink Sheets on Tuesday, were hit hard in trading in the early afternoon and never recovered.
Hertz priced 44.52 million shares at $ 29, at the high end of the range of $ 25 to $ 29 per share, as the offer size increased from 37.1 million shares. The price was at a discount compared to Hertz’s closing price of $ 32.62 on Pink Sheets Monday. Hertz’s warrants (HTZWW) closed at $ 16.95, down 18.5%.
The Nasdaq debut is disappointing with Hertz shares trading below the offer price. Tom Brady, the new Hertz spokesman featured in Hertz ads related to the company’s recent move to buy 100,000 Tesla vehicles, tweeted “To the Mooooon” earlier this morning about the deal ahead of the Nasdaq listing.
While the Hertz stock has not traded well so far on Tuesday, the deal illustrated Hertz’s better financial health since it went bankrupt on June 30. None of the shares were sold by the company – all were sold by existing owners. The company is now valued at $ 13 billion.
Hertz said it planned to buy 10.3 million shares of the offer for $ 300 million in the equivalent of a share buyback.
The share issue will significantly increase the public flow in Hertz shares. Until the offer, only about 3% of Hertz’s 473 million shares were available for public trading. These 14 million shares were issued to former Hertz shareholders as part of the bankruptcy restructuring package.
The rest of the shares that are mostly sold to institutional investors have been restricted under Securities and Exchange Commission Rule 144 and have traded between institutions on the Wall Street trading table.
Assuming insurers exercise the over-allotment option of 6.7 million shares, Hertz’s public transfer will rise to around 55 million shares, still slightly more than 10% of the outstanding share. Significantly more shares will be unlocked at the end of December on the six-month day before Hertz’s rise from bankruptcy.
The agreement limits what has been a successful emergence from bankruptcy for Hertz. The company sold equity to investors as part of the restructuring at $ 10 per share.
Hertz and rival
Avis Budget Group (CAR), whose shares have risen recently, is benefiting from strong conditions in the US rental car market.
Hertz reported record third-quarter results, including $ 860 million in adjusted earnings before interest, taxes, depreciation and amortization (Ebitda), while projecting $ 2 billion to $ 2.1 billion of Ebitda for 2021, compared to $ 649 million in 2019. The newspaper shares were out of order. 6.7%, to $ 273.33, on Tuesday and has risen 60% since the company’s third-quarter earnings report last week.
Hertz has unveiled a $ 4 billion deal to buy 100,000 Tesla vehicles, a scheme to give Tesla to
Uber technologies (UBER) drivers and an agreement to sell some of their used cars to
Carvana (CVNA). Hertz said they expected delivery of Tesla by the end of 2022, however
Tesla (TSLA) has questioned that timing.
Prior to the share issue, Hertz invested $ 1.2 billion in net cash, excluding around $ 7 billion in securities. Hertz plans to offer a $ 1.5 billion repurchase by the end of the year of 9% of 9% preference shares owned largely by funds run by
Apollo Global Management (APO). The preferred one can be redeemed at a premium of 30%.
Write to Andrew Bary at firstname.lastname@example.org