Hertz Global Holdings Inc filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Unregistered Sales of Equity Securities, Financial Statements and Exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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FORM
CURRENT REPORT
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Securities registered pursuant to Section 12(b) of the Act:
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| Hertz Global Holdings, Inc. | ||||||
| Hertz Global Holdings, Inc. | ||||||
| The Hertz Corporation | None | None | None |
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| Item 1.01 | Entry into a Material Definitive Agreement. |
European ABS Amendments
On June 26, 2024, affiliates of The Hertz Corporation (“Hertz Corp.”), the primary operating company and wholly-owned indirect subsidiary of Hertz Global Holdings, Inc. (the “Company” or “Hertz Holdings”), entered into amendments to the securitization platform for financing activities relating to such affiliates’ vehicle fleets in France, the Netherlands, Germany, Spain, and Italy (the “European ABS”) to (i) add and make eligible certain Belgian fleet assets to the securitization platform, and (ii) make certain other administrative amendments and revisions for the incorporation of the Belgian fleet assets (the “Amendments”). The aggregate maximum borrowings available under the European ABS will remain unchanged after giving effect to the additional Belgian fleet assets under the Amendments.
Pursuant to the European ABS, International Fleet Financing No. 2 B.V. (the “IFF No. 2”), an indirect, special purpose subsidiary of Hertz Corp., is party to an issuer facility agreement originally dated September 25, 2018 between, among others, IFF No. 2, Hertz Europe Limited (as Administrator), BNPP Paribas Trust Corporation UK Limited (as Security Trustee), and Credit Agricole Corporate and Investment Bank (as Administrative Agent) (the “Issuer Facility Agreement”), which includes defined terms as set forth in a Master Definitions and Constructions Agreement (the “MDCA”). IFF No. 2’s proceeds from the Issuer Facility Agreement are made available on a revolving basis to certain special-purpose fleet subsidiaries of Hertz Corp. (the “Fleet Companies”) for their purchases of rental vehicles, and those vehicle fleets serve as the underlying collateral for the Issuer Facility Agreement. Certain of Hertz Corp.’s international operating subsidiaries lease the vehicles from the Fleet Companies for rental to customers. Hertz Corp. has guaranteed certain obligations of the international operating subsidiaries to the Fleet Companies pursuant to a Performance Guarantee and Indemnity Deed dated December 21, 2021 (the “Guarantee”). In connection with the Amendments, each of the Issuer Facility Agreement, the MDCA, and the Guarantee were amended effective as of June 26, 2024.
The foregoing descriptions of the amendments to the Issuer Facility Agreement, the MDCA, and the Guarantee are qualified in their entirety by reference to Exhibits 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K, which are incorporated herein by reference.
First Lien Notes Indenture
On June 28, 2024, Hertz Corp. completed an offering of $750,000,000 aggregate principal amount of its 12.625% First Lien Senior Secured Notes due 2029 (the “First Lien Notes”). Hertz Corp. used the net proceeds of the offering of the First Lien Notes, together with the net proceeds from the offering of the Exchangeable Notes (as defined below), to pay down a portion of its $2.0 billion committed revolving credit facility, improving liquidity. The revolving credit facility remained available following the paydown, and total commitments under the revolving credit facility are unchanged as a result of the offerings.
The First Lien Notes were issued at par pursuant to an Indenture, dated as of June 28, 2024 (the “First Lien Notes Indenture”), among Hertz Corp., the guarantors named therein and Computershare Trust Company, N.A., as trustee and as collateral agent. The First Lien Notes mature on July 15, 2029 and bear interest at a rate of 12.625% per year. Interest on the First Lien Notes is payable on January 15 and July 15 of each year, beginning on January 15, 2025.
Hertz Corp. may redeem the First Lien Notes, in whole or in part, at any time prior to July 15, 2027 at a redemption price equal to 100% of the principal amount of the First Lien Notes redeemed, plus accrued and unpaid interest on the First Lien Notes, if any, to, but not including, the redemption date, plus an applicable “make whole” premium described in the First Lien Notes Indenture. Thereafter, Hertz Corp. may redeem the First Lien Notes in whole or in part, at the redemption prices set forth in the First Lien Notes Indenture. In addition, at any time on or prior to July 15, 2027, up to 40% of the aggregate principal amount of the First Lien Notes may be redeemed with funds in an aggregate amount not exceeding the aggregate proceeds from certain equity offerings at a redemption price of 112.625% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date;
provided that at least 50% of the original aggregate principal amount of the First Lien Notes (including the principal amount of any additional notes) remains outstanding immediately after each such redemption of the First Lien Notes. If certain change of control triggering events occur, holders of the First Lien Notes will have the right to require Hertz Corp. to offer to repurchase their First Lien Notes at 101% of their principal amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date.
The First Lien Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and on a senior first-lien secured basis by Rental Car Intermediate Holdings, LLC (“Intermediate Holdings”), Hertz Corp.’s direct parent company, and each of Hertz Corp.’s existing domestic subsidiaries and future restricted subsidiaries that is a borrower or guarantees indebtedness under Hertz Corp.’s first lien credit facilities or certain other indebtedness for borrowed money (the “Subsidiary Guarantors”). The guarantees are subject to release under specified circumstances, including certain circumstances in which such guarantees may be automatically released without the consent of the holders of the First Lien Notes.
The First Lien Notes and the related guarantees are Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ senior first-lien secured obligations and rank equal in right of payment with all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ existing and future unsubordinated obligations; effectively senior to all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ indebtedness that is unsecured, including Hertz Corp.’s existing senior unsecured notes, or that is secured by a lien ranking junior to the liens on the collateral securing the First Lien Notes and Intermediate Holdings’ and the Subsidiary Guarantors’ related guarantees, including the Exchangeable Notes, in each case, to the extent of the value of the collateral securing the First Lien Notes; effectively equal with all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ existing and future indebtedness that is secured by first-priority liens on the collateral (including indebtedness under Hertz Corp.’s first lien credit facilities); senior in right of payment to any of Hertz Corp’s, Intermediate Holdings’ and the Subsidiary Guarantors’ subordinated indebtedness; and structurally subordinated to all existing and future liabilities (including trade payables) of Hertz Corp.’s subsidiaries that do not guarantee the First Lien Notes. The guarantee of the Company will be its senior unsecured obligation and will rank equally in right of payment with all of its existing and future unsubordinated obligations and senior in right of payment to any of its subordinated indebtedness. The First Lien Notes and the related guarantees will also be effectively subordinated to any existing or future indebtedness that is secured by liens on assets that do not constitute a part of the collateral securing the First Lien Notes to the extent of the value of such assets, and to any future secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness.
The First Lien Notes and Intermediate Holdings’ and the Subsidiary Guarantors’ related guarantees will be secured (subject to certain exceptions and permitted liens) on a first-lien basis by the same assets (other than certain excluded property) that secure indebtedness under Hertz Corp.’s first lien credit facilities.
The First Lien Notes Indenture contains high yield covenants limiting the ability of Hertz Corp. and its restricted subsidiaries to: incur or guarantee additional indebtedness; incur or guarantee secured indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell assets; transfer intellectual property to unrestricted subsidiaries; merge or consolidate or sell all or substantially all of their assets; and create restrictions on the ability of Hertz Corp.’s restricted subsidiaries to pay dividends or other amounts to Hertz Corp. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.
The First Lien Notes Indenture also contains customary events of default, all as described in the First Lien Notes Indenture.
The foregoing description is qualified in its entirety by reference to the First Lien Notes Indenture and the form of First Lien Note included therein, which are filed herewith as Exhibits 4.1 and 4.2, respectively, and incorporated herein by reference.
Exchangeable Notes Indenture
On June 28, 2024, Hertz Corp. completed an offering of $250,000,000 aggregate principal amount of its 8.000% Exchangeable Senior Second-Lien Secured PIK Notes due 2029 (the “Exchangeable Notes”).
The Exchangeable Notes were issued at par pursuant to an Indenture, dated as of June 28, 2024 (the “Exchangeable Notes Indenture”), among Hertz Corp., the guarantors named therein and Computershare Trust Company, N.A., as trustee and as collateral agent. The Exchangeable Notes will bear PIK interest at a rate of 8.000% per year payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025. The Exchangeable Notes will mature on July 15, 2029, unless repurchased, redeemed or exchanged in accordance with their terms prior to maturity.
The exchange rate will initially be 150.9388 shares of common stock of the Company (“Common Stock”) per $1,000 capitalized principal amount of Exchangeable Notes (equivalent to an initial exchange price of approximately $6.6252 per share of Common Stock). The initial exchange price of the Exchangeable Notes represents a premium of approximately 89% to the $3.51 closing price of the Common Stock on the Nasdaq Global Select Market on June 20, 2024. Prior to April 15, 2029, the Exchangeable Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, the Exchangeable Notes will be exchangeable at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Exchangeable Notes will be exchangeable on the terms set forth in the Exchangeable Notes Indenture into cash, shares of Common Stock, or a combination thereof, at Hertz Corp.’s election. The exchange rate is subject to adjustment in some circumstances described in the Exchangeable Notes Indenture. In addition, following certain corporate events that occur prior to the maturity date or Hertz Corp.’s delivery of a notice of redemption, Hertz Corp. will increase, in certain circumstances, the exchange rate for a holder who elects to exchange its Exchangeable Notes in connection with such a corporate event or elects to exchange its Exchangeable Notes called for redemption in connection with such notice of redemption, as the case may be.
Holders of the Exchangeable Notes will have the right to require Hertz Corp. to repurchase all or a portion of their Exchangeable Notes at 100% of their initial principal amount of the Exchangeable Notes to be repurchased plus PIK interest on such Exchangeable Notes for each interest payment date occurring on or prior to the repurchase date plus accrued and unpaid PIK interest to, but excluding, the date of such repurchase, upon the occurrence of certain corporate events constituting a “fundamental change” as defined in the Exchangeable Notes Indenture. Hertz Corp. may not redeem the Exchangeable Notes prior to July 20, 2027. On or after July 20, 2027 and on or prior to the 31st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of Common Stock exceeds 250% of the exchange price for the Exchangeable Notes for certain specified periods, Hertz Corp. may redeem all (but not part) of the Exchangeable Notes at a cash redemption price equal to the initial principal amount of the Exchangeable Notes to be redeemed plus PIK interest on such Exchangeable Notes for each interest payment date occurring on or prior to the redemption date plus accrued and unpaid PIK interest on such Exchangeable Notes to, but not including, the redemption date.
The Exchangeable Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and on a senior second-lien secured basis by Intermediate Holdings and the Subsidiary Guarantors. The guarantees are subject to release under specified circumstances, including certain circumstances in which such guarantees may be automatically released without the consent of the holders of the Exchangeable Notes.
The Exchangeable Notes and the related guarantees are Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ senior second-lien secured obligations and rank equal in right of payment with all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ existing and future unsubordinated obligations; effectively senior to all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ indebtedness that is unsecured, including Hertz Corp.’s existing senior unsecured notes, or that is secured by a lien ranking junior to the liens on the collateral securing the Exchangeable Notes and Intermediate Holdings’ and the Subsidiary Guarantors’ related guarantees, in each case, to the extent of the value of the collateral securing the Exchangeable Notes; effectively equal with all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ future indebtedness that is secured by second-priority liens on the collateral; senior in right of payment to any of Hertz Corp’s, Intermediate Holdings’ and the Subsidiary Guarantors’ subordinated indebtedness; effectively subordinated to all of Hertz Corp.’s, Intermediate Holdings’ and the Subsidiary Guarantors’ existing and future indebtedness that is secured by liens senior to the liens on the collateral securing the Exchangeable Notes and Intermediate Holdings’ and the Subsidiary Guarantors’ related guarantees (including indebtedness under Hertz Corp.’s first lien credit facilities and the First Lien Notes), to the extent of the value of the collateral securing such indebtedness; and structurally subordinated to all existing and future liabilities (including trade payables) of Hertz Corp.’s subsidiaries
that do not guarantee the Exchangeable Notes. The guarantee of the Company will be its senior unsecured obligation and will rank equally in right of payment with all of its existing and future unsubordinated obligations and senior in right of payment to any of its subordinated indebtedness. The Exchangeable Notes and the related guarantees will also be effectively subordinated to any existing or future indebtedness that is secured by liens on assets that do not constitute a part of the collateral securing the Exchangeable Notes to the extent of the value of such assets, and to any future secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness.
The Exchangeable Notes and Intermediate Holdings’ and the Subsidiary Guarantors’ related guarantees will be secured (subject to certain exceptions and permitted liens) on a second-lien basis by the same assets (other than certain excluded property) that secure indebtedness under Hertz Corp.’s first lien credit facilities.
The Exchangeable Notes Indenture contains high yield covenants limiting the ability of Hertz Corp. and its restricted subsidiaries to: incur or guarantee additional indebtedness; incur or guarantee secured indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell assets; transfer intellectual property to unrestricted subsidiaries; merge or consolidate or sell all or substantially all of their assets; and create restrictions on the ability of Hertz Corp.’s restricted subsidiaries to pay dividends or other amounts to Hertz Corp. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.
The Exchangeable Notes Indenture also contains customary events of default, all as described in the Exchangeable Notes Indenture.
The foregoing description is qualified in its entirety by reference to the Exchangeable Notes Indenture and the form of Exchangeable Note included therein, which are filed herewith as Exhibits 4.3 and 4.4, respectively, and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by Item 2.03 contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth under the heading “Exchangeable Notes Indenture” in Item 1.01 above is incorporated into this Item 3.02 by reference. The Exchangeable Notes were issued to the initial purchasers in reliance on Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”) in transactions not involving any public offering, and the initial purchasers resold the Exchangeable Notes in reliance upon Rule 144A under the Securities Act to persons reasonably believed to be “qualified institutional buyers,” as defined therein. Any shares of Common Stock that may be issued upon exchange of the Exchangeable Notes will be issued in reliance upon Section 3(a)(9) of the Securities Act as involving an exchange by the Company exclusively with its security holders. Initially, a maximum of 105,813,447 shares of Common Stock may be issued upon exchange of the Exchangeable Notes, based on the initial maximum exchange rate of 284.9002 shares of Common Stock per $1,000 capitalized principal amount of Exchangeable Notes, which is subject to customary anti-dilution adjustment provisions.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HERTZ GLOBAL HOLDINGS, INC. | ||
| THE HERTZ CORPORATION | ||
| (each, a Registrant) | ||
| By: | /s/ Wayne Gilbert West | |
| Name: | Wayne Gilbert West | |
| Title: | Chief Executive Officer | |
Date: June 28, 2024