Hertz was founded in 1918. As of the beginning of this year, there were a total of 568,000 cars and 12,400 companies and franchise outlets around the world, of which about a third were at the airport. Car rental companies such as Dollar, Thrifty and Firefly are all their brands.
But this 100-year-old company is now suffering the same blow as the aviation industry. On the evening of May 22 local time in the United States, Hertz filed for bankruptcy.
According to the media, the bankruptcy will make Hertz one of the highest-profile corporate debt default cases caused by the epidemic affecting American travel. At present, the company has nearly 19 billion US dollars of debt (about 135 billion yuan), and a default occurred last month. Among them, US $ 4.3 billion was issued corporate bonds and loans, and its subsidiaries also held US $ 14.4 billion in debt secured by cars.
Hertz shares closed down 7.5% on Friday and have fallen 82% so far this year. The company's latest market value is $ 400 million. After the news of bankruptcy was announced, Hertz ’s share price fell sharply in after-hours trading on Friday night, plunging 35%. As part of the bankruptcy proceedings, the company ’s stock price may become worthless.
It is worth mentioning that Carl Icahn, the “Wall Street Wolf King” famous for making big profits with “negative oil prices” in April this year, is Hertz ’s largest shareholder and holds 38.9% of the company.
Hertz filed for bankruptcy protection
Hertz said in its May 22 statement that the impact of the new crown epidemic on tourism demand was sudden, causing the company ’s revenue and future bookings to plummet. Although the company took immediate action to respond to the crisis, there are still uncertainties about when revenue will resume and when the used car market will fully resume sales. Hertz intends to continue operating while restructuring the debt, and a healthier company appears financially.
It is understood that due to emergency measures to curb the new crown virus, business and leisure travel has stalled. As the second largest car rental company in the United States, Hertz began to lay off employees in March this year to save cash. Hertz has been negotiating with lenders and the US Treasury about the possibility of rescue. However, due to sluggish demand, large fleets and falling second-hand car prices, Hertz has insufficient liquidity to maintain market recovery. According to US media reports, Hertz failed to complete a repayment on April 27, and the lender extended the grace period for payment to May 22.
Hertz has already carried out in-depth layoffs, 12,000 employees in North America have been laid off, and another 4,000 employees are on vacation. The number of its employees in the United States was 38,000 at the beginning of this year.
According to the Southern Metropolis Daily, the donkey Nuomi Tangyuan from Guangzhou said that Hertz has a large market in North America and Australia. They have gone to Australia, New Zealand, Canada and other places for self-driving in recent years. The cars of its brands Dollar and Thrifty are mainly because it is convenient to pick up and return the car, the car rental procedures are not complicated, and the car condition is also very good, almost all new cars. Hertz declared bankruptcy, but will continue to operate, "I hope it will not collapse completely."
On May 23, in response to the "U.S. Hertz's application for bankruptcy protection", Hertz International's Chinese customer service responded that at present, the Asia-Pacific region has not received any adjustment news, only for the United States and Canada.
"Wall Street Wolf King" buried
As of May 19, 2020 local time, Hertz ’s largest shareholder, Icahn, held 55 million shares of the company, accounting for 38.9% of the outstanding common shares. Based on the company's latest closing price of $ 2.84, the value of this portion of equity is $ 156 million.
"Wall Street Wolf King" Icahn's most proud recent operation has been the bottoming out of "negative oil prices". Since the WTI May contract expired on April 21, traders who had a large number of positions before this were selling wildly at the last moment. And because WTI crude oil futures are settled in physical goods, and the storage space in the United States is almost exhausted, investors who have not closed positions in advance have only a way to sell. This also caused the WTI May contract on April 20 to close at -37.63 USD / barrel, which fell for the first time in history to a negative value.
Icahn used an epic crash of crude oil futures to supply his refinery CVR Energy. Icahn holds up to 70% of the company's shares.
In an interview with the media, Icahn said that when oil prices fell to a negative value, CVR had tried to buy 1 million-2 million barrels. He did not disclose how much he ultimately bought, but said, "We did make a lot of money."
Icahn said, "Seeing that oil prices have fallen like this, I can't help but call the company's management-generally I just don't ask about the company's specific operations-I told them that no one can find a place to put oil , But we have. But they said it was that difficult. It was not delivered in the futures market before, etc. Under my impulse, they quickly established an account and bought oil at an incredible price. This is also me A spectacle in history that I have never seen before, I buy oil and then the seller has to pour money into me-I will pay me 35 dollars for a barrel. "
If Icahn bought 1 million barrels at -35 dollars, his profit would be at least 35 million dollars. If the recent oil price rebounded to 33 dollars, his profit would be close to 70 million dollars!
Embarrassingly, Icahn's bottom-line "negative oil price" may not make up for the loss in investment in Hertz.
Rival Uber is also sad
The social isolation and other restricted economic and daily life activities caused by the New Coronary Pneumonia epidemic have hit many industries such as automobiles, aviation, and tourism. The companies affected are many Hertz car rental competitors, such as Uber, a ride-hailing startup that has emerged in recent years.
Uber's recent financial report shows that Uber's ride-hailing business fell for the first time in the first quarter of this year, and total ride-hailing orders fell by 5% in the quarter, while it increased by more than 20% in the same period last year, highlighting the impact of the epidemic on this major Uber revenue source. However, the meal delivery service became a bright spot, and the total bookings in the first quarter increased significantly by 52%.
Uber's CEO Dara Khosrowshahi revealed in the financial report that the company's car business revenue in April dropped by 80% year-on-year. Uber announced at the time that it would cut about 3,700 people to cut costs.
Last week, Khosrowshahi announced that it will lay off about 3,000 people, and will close or integrate about 45 offices around the world, reduce investment in multiple non-core businesses, refocus its work on core businesses, and gradually close product incubators and artificial intelligence experiments. Room to reassess money-burning business freight and autonomous driving.
Khosrowshahi said in an email on Monday that Uber found some signs of recovery, but it was a recovery after falling into a trough. The recovery that can be seen in terms of speed and amplitude is still limited. The meal delivery business has not been able to make up for the company ’s cost gap.
