FILE PHOTO: A logo of the American car rental company Hertz is seen at Bordeaux Airport in Merignac, Southwestern France, February 4, 2016. REUTERS/Regis Duvignau/File Photo
(Reuters) – A bankruptcy judge on Friday approved Hertz Global Holdings Inc’s proposal to sell up to $1 billion in shares, as the car rental firm looks to cash in on a huge speculative rise in its share price since filing for bankruptcy late last month.
Hertz’s stock closed at 55 cents on May 26, since then it has risen more than fivefold in value. The shares were down 8.5% in extended trading on Friday.
The company was seeking permission to potentially sell 246.78 million unissued shares to Jefferies LLC.
Judge Mary Walrath ordered that Hertz was “authorized, but not required, to sell shares of the common stock” and that “Jefferies shall be entitled to retain, from the proceeds generated from the sale of the unissued stock, amounts equal to all fees owing under the sale agreement”.
Hertz said the net proceeds would be used for general working capital purposes.
“The recent market prices of and the trading volumes in Hertz’s common stock could potentially present a unique opportunity for the debtors to raise capital on terms that are far superior to any debtor-in-possession financing,” the company said in a regulatory filing on Thursday.
The company filed for Chapter 11 protection in a U.S. bankruptcy court in Delaware after talks with creditors failed to result in much needed relief.
Reporting by Sanjana Shivdas in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila