wolfstreet.com / by Wolf Richter / Aug 1, 2017
It didn’t even bother explaining why. Investors are left to their own devices to figure it out.
On Friday after markets had closed, at the end of July, when no one was paying attention, the beleaguered rental-car giant Hertz rescinded in an SEC filing a big-fat promise it had made on May 31. The promise was made to induce investors into shelling out $1.25 billion for a new issue of bonds.
Hertz had promised in a May 31 press release, as these senior second-lien secured notes were being priced, that it would use the proceeds from the sale of the bonds to buy back existing debt. This was important to bond buyers. As Hertz claimed, the notes were issued “as part of an overall plan to optimize the Company’s capital structure.”
“Optimizing the capital structure” — that’s good. Not adding more debt. This is what it promised in its press release at the time:
Hertz intends to use a portion of the net proceeds from the issuance of the Notes, together with available cash, to redeem in full all of its outstanding $250.0 million aggregate principal amount of 4.25% Senior Notes due 2018 (the “2018 Notes”) and $450.0 million aggregate principal amount of 6.75% Senior Notes due 2019 (the “2019 Notes”). Hertz intends to use the remaining net proceeds from the issuance of the Notes, together with available cash, to refinance certain of its other existing indebtedness in one or more transactions following the consummation of the Offering, which may include repayments of outstanding borrowings and/or commitment reductions with respect to its senior credit facilities and/or repurchases, redemptions or retirements of certain of its other senior notes.
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