Apollo, Knighthead and Certares Sponsor Plan to Fund Hertz’s Exit From Bankruptcy

Paul, Weiss is advising funds and accounts managed by affiliates of Apollo Capital Management, L.P. in a joint proposal, alongside Knighthead Capital Management LLC and Certares Opportunities LLC, to sponsor Hertz Global Holdings, Inc.’s chapter 11 plan of reorganization and to fund Hertz’s and its affiliates’ exit from bankruptcy. The bankruptcy court approved the proposal, after Apollo and the other plan sponsors submitted the winning bid in an auction, which lasted approximately 30 hours over two days.

The proposal includes the issuance of $1.5 billion of new preferred stock to Apollo, direct common stock investments by the plan sponsors and other parties totaling $2.781 billion, and a fully backstopped rights offering open to Hertz’s existing shareholders and unsecured noteholders to purchase $1.635 billion of common stock. Hertz will also enter into a $1.3 billion term loan facility and a $1.5 billion exit revolving credit facility to fund the transactions. The plan will provide for the payment in full in cash of all creditor claims and will deliver significant value to Hertz’s existing shareholders, including $239 million of cash; common stock representing 3% of the shares of reorganized Hertz; and 30-year warrants for 18% of the common stock of reorganized Hertz, with a strike price based on a total equity value of $6.5 billion, or in lieu of warrants, the opportunity for eligible shareholders to subscribe for shares of common stock at plan equity value.

The Paul, Weiss team includes, among others, corporate partners John Scott, Gregory Ezring and Brian Janson and counsel David Levine; tax partners Brad Okun and Brian Grieve; intellectual property partner Charles Googe; litigation partners Lewis Clayton and Andrew Ehrlich and  counsel Steven Herzog; restructuring partner Kyle Kimpler; and real estate partner Peter Fisch.