Hertz wins dismissal of lawsuit in Delaware over warrants (updated)
07/02/2025 22:08
(Rewrites first paragraph; adds accusations, details from
decision, Hertz comment, case citation, byline)
By Jonathan Stempel
Feb 7 (Reuters) - Hertz Global Holdings HTZ.O on
Friday won the dismissal of a lawsuit by warrant holders that
could have forced the car rental company to owe hundreds of
millions of dollars following a series of financing
transactions.
Funds associated with Discovery Capital Management
alleged in a complaint last June that Hertz underwent a
multi-billion-dollar "recapitalization" between November 2021
and December 2023 that amounted to a change of control,
entitling them to a $187.5 million payment.
The funds held 11% of the Hertz warrants, implying about
$1.7 billion of claims if other holders also sought payments
from the Estero, Florida-based company.
But in Friday's decision, Judge Eric Davis of the
Delaware Chancery Court rejected the funds' breach of contract
claim.
He said Hertz's $3.4 billion of stock repurchases and
$2.2 billion of debt issuance, taken together, did not amount to
"significant structural changes to Hertz's capital makeup that a
'recapitalization' suggests."
To hold otherwise, the judge said, "would be overly
inclusive and could produce absurd results."
Lawyers for the Discovery funds did not immediately
respond to requests for comment. Discovery is based in Norwalk,
Connecticut.
Hertz was pleased with the decision.
"As we said back in June this claim was meritless and
not supported by the terms of the warrant language or market
practice," Hertz said in a statement.
The case is Discovery Global Opportunity Master Fund Ltd
et al v Hertz Global Holdings Inc, Delaware Chancery Court, No.
2024-0655.
(Reporting by Jonathan Stempel in New York
Editing by Marguerita Choy)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))