Hertz Global Holdings Inc. agreed to offer some value to equity holders when he left Chapter 11, arguing for individual traders who insisted the company deserved something despite filing for bankruptcy.
Hertz proposed on Wednesday, in a Chapter 11 exit plan, that current shareholders receive purchase orders of up to 4% of the restructured business, the first time the company has said it is worth enough to distribute a certain value to its owners.
The distribution of shareholders would mean a recovery of 60 to 70 cents per share, a “material return on equity,” Hertz lawyer Thomas Lauria said during a court hearing on Wednesday.
If approved by the U.S. Bankruptcy Court in Wilmington, Del., This result would make Hertz a relative rarity in corporate bankruptcies, where capital is behind debt and is most often eliminated. Shares of Hertz closed at $ 1.74 on Wednesday, down 8.4% that day but 36% so far.
The proposed equity distribution is part of a restructuring proposal submitted by Dundon Capital Partners LLC, Centerbridge Partners LP and Warburg Pincus LLC, selected by Hertz earlier this month, following a competitive process to finance the company’s exit from Chapter 11.