Hertz Global Holdings, Inc. (NASDAQ:HTZ) shares are trading lower Wednesday after the company announced a proposed offering of $100 million of common stock.
- Hertz shares are retreating from recent levels. Why is HTZ stock falling?
The Offering
Hertz announced it intends to offer shares of its common stock at an aggregate public offering price of $100 million in a SEC-registered offering. However, the structure is unusual—the shares will be loaned to J.P. Morgan Securities LLC as “Borrowed Shares,” with all proceeds going to J.P. Morgan rather than to Hertz or its subsidiaries. Hertz will receive only a nominal lending fee for the use of the shares. J.P. Morgan will be required to return the borrowed shares to Hertz under a share lending agreement.
Why It’s Structured This Way
The offering is contingent upon the closing of a separate private offering of Exchangeable Senior First-Lien Secured PIK Notes due 2030 by Hertz’s subsidiary, The Hertz Corporation. The share lending agreement is designed to allow investors in the Notes to hedge their investments through short sales or privately negotiated derivatives transactions. J.P. Morgan will use the resulting short position to facilitate those hedging transactions.
Hertz Shares Plummet
HTZ Price Action: At the time of publication, Hertz shares are trading 21.15% lower at $3.98, according to data from Benzinga Pro.
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