Hertz eyes record drop on exchangeable notes offering, EBITDA warning
BUZZ-Hertz eyes record drop on exchangeable notes offering, EBITDA warning Updates to market open, adds move in Avis shares
** Rental car firm Hertz Global's HTZ.O shares down 27.6% to $3.66 on Weds as it seeks capital raise and warns on current-qtr core profit
** HTZ shares on course for biggest daily pct decline on record and hit over one-year low
** Estero, Florida-based HTZ early Weds announced private offering of $300 mln exchangeable PIK notes due 2030; a portion of the interest to be paid in cash and in form of PIK ("payment-in-kind") interest
** PIK provides financial flexibility for a company to defer cash interest payments, but can add to debt balances
** HTZ intends to use net proceeds from the notes offering for general corp purposes, including debt repayment
** In addition, HTZ commenced separate public offering of $100 mln shares with JP Morgan and Barclays as underwriters
** HTZ will not receive any proceeds from the share offering. It will lend the shares to JP Morgan to facilitate hedging transactions by investors in the exchangeable notes
** Alongside the offerings, HTZ said in a filing unexpected softness in the used car market caused it to realize losses on vehicle sales in May compared to gains in Apr, and now sees adj EBITDA of $50-$80 mln, near the lower end of previous Q2 guidance
** Rival Avis Budget Group's CAR.O shares fall 7% on the session
** HTZ shares have lost 50% over the past 12 months
** 6 analysts rate the stock "hold", the other 3 rate "sell"; median PT $5, per LSEG data
(Lance Tupper is a Reuters market analyst. The views expressed are his own)
((lance.tupper@tr.com 1-646-279-6380))