HTZ Stock On Track To Hit 20-Month Lows – What’s Driving Today’s Decline?

Hertz priced its previously announced $100 million share offering and upsized its $300 million exchangeable notes offering.

• Hertz priced the $100 million offering at $2.70 per share, a 10% discount to the stock’s closing price on Wednesday.
• It’s unit, The Hertz Corp., upsized its private offering of exchangeable senior first-lien secured payment-in-kind notes due 2030 to $350 million from $300 million.
• On Wednesday, Hertz said it expects second-quarter adjusted earnings before interest, tax, depreciation, and amortization to come in at the lower end of its guidance.

Shares of Hertz Global Holdings (HTZ) slumped more than 7% in pre-market trading on Thursday, extending a massive 41% sell-off in the previous session, after the rental car firm priced its previously announced share offering as well as upsized a $300 million exchangeable notes offering.

If the pre-market levels hold, HTZ shares would hit their lowest levels in nearly 20 months.

HTZ’s $100M Offering Comes At A Discount

On Thursday, Hertz priced a registered offering of roughly 37 million shares of common stock at $2.70 per share. This represents a 10% discount to the stock’s closing price on Wednesday.

This is part of a previously announced Hertz offering to raise $100 million through a share-lending arrangement with J.P. Morgan Securities. Under the deal, the company will lend shares to the underwriter, which will sell them in the market and use the resulting short position to support hedging activities tied to investors participating in Hertz’s planned exchangeable notes offering.

HTZ Upsizes PIK Notes To $350M

Separately, Hertz’s subsidiary, The Hertz Corp., upsized its private offering of exchangeable senior first-lien secured payment-in-kind (PIK) notes due 2030 to $350 million from $300 million.

Hertz expects net proceeds of about $339.5 million, which it plans to use to repay borrowings under its revolving credit facility and for general corporate purposes. The offering is expected to close on June 29.

On Wednesday, Hertz said it expects second-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) to come in between $50 million and $80 million, near the lower end of its earlier forecast. The company cited weakness in the used-car market, which weighed on results and led to lower proceeds from vehicle sales in May.

What Is Retail’s Take On HTZ?

Despite the selloff, retail sentiment surrounding HTZ on Stocktwits turned ‘extremely bullish’ from ‘bullish,’ amid an 8,675% surge in message volumes over a 24-hour period.

One user expects the stock to climb to around $3.58 once the “dust settles.”

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Another user expects the stock to drop to $2.25.

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HTZ shares have been under heavy selling pressure this year, declining around 43%.

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