Hertz Suspends $500 Million Stock Sale Amid SEC Scrutiny

Thursday, June 18th 2020, 10:05 am
By: Associated Press, CBS News

Bankrupt Hertz has shelved plans to sell $500 million worth of stock amid scrutiny from the Securities and Exchange Commission.

The rental car company, which declared bankruptcy under Chapter 11 last month, disclosed its decision to freeze the offering on Wednesday in a regulatory filing. Earlier in the day, SEC Chairman Jay Clayton said on CNBC that the agency had informed Hertz that regulators had "comments" about its proposed stock offering. 

Clayton also said he expected Hertz to put the transaction — which is highly unusual for a company that has filed for bankruptcy protection — on hold until the SEC's comments had been addressed.

Hertz, which is based in Estero, Florida, said Monday that it received approval from the bankruptcy court to proceed with the stock sale. The move raised eyebrows given the potential threat to investors. In its prospectus for the offering, Hertz warned that investors who buy its shares face "substantial risks" and that the stock could ultimately prove worthless.

Hertz has $19 billion in debt and just $1 billion in cash — a significant hurdle as it seeks to restructure. Even so, its shares have more than doubled this month, rising slightly on Wednesday to $2 on the news that the offering has been delayed.

First published on June 17, 2020 / 6:16 PM

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