Hertz Halts Plan to Sell ‘Worthless’ Stock on SEC Scrutiny
[Ensure you have all the info you need in these unprecedented times. Subscribe now.]
Hertz Global Holdings Inc. suspended plans to raise cash by selling new shares that the bankrupt car renter described as potentially “worthless” after its proposal failed to pass muster with regulators.
The company halted sales “pending further understanding of the nature and timing” of the regulatory review, according to a filing. The stock, whose trading had been halted earlier in the day, jumped to almost $2.30 after the disclosure, and then slumped back to trade little changed at $1.95 at 3:47 p.m.
Hertz’s reversal followed inquiries from the U.S. Securities and Exchange Commission about the plan advanced by the car renter, which sought to raise as much as $500 million. The company warned at least half a dozen times in its offering that would-be buyers could find themselves wiped out.
Hertz had said stockholders wouldn’t get anything from its bankruptcy plan unless those with more senior claims, including bondholders, are paid in full. The most junior bonds alone have seen more than $2 billion of value evaporate, enough to erase the shares several times over.
“We have let the company know that we have comments on their disclosure,” SEC Chairman Jay Clayton said in a CNBC interview June 17. “In most cases, when you let a company know that the SEC has comments on their disclosure, they do not go forward until those comments are resolved.”
Want more news? Listen to today's daily briefing:
Subscribe: Apple Podcasts | Spotify | Amazon Alexa | Google Assistant | More
