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HERTZ GLOBAL: Granted Forbearance From Lenders Until May 22

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Hertz Global Holdings, Inc. and The Hertz Corporation on May 4, 2020, entered into forbearances and limited waivers with certain of the Company’s corporate lenders and holders of the Company’s asset-backed vehicle debt.

The forbearances and waivers provide Hertz with additional time through May 22, 2020 to engage in discussions with its key stakeholders with the goal to develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic and Hertz’ ongoing operating and financing requirements.

As a result of the COVID-19 global pandemic, Hertz and its subsidiaries have experienced a rapid, sudden and dramatic negative impact on their businesses. While Hertz has taken aggressive action to eliminate costs, it faces significant ongoing operating expenses, including monthly payments under its Amended and Restated Master Motor Vehicle Operating Lease and Servicing Agreement (Series 2013-G1) with Hertz Vehicle Financing LLC (the “Operating Lease”), pursuant to which Hertz leases vehicles used in its United States rental car operations.

On April 27, 2020, Hertz did not make certain payments in accordance with the Operating Lease. This caused the occurrence of an amortization event on May 1, 2020 under the terms of a series of debt instruments pursuant to which Hertz and its vehicle finance subsidiaries acquire the leased vehicles.

On May 4, 2020, Hertz, Hertz Vehicle Financing LLC (“HVF”), Hertz Vehicle Financing II LP (“HVF II”) and DTG Operations, Inc. entered into a forbearance agreement (the “Forbearance Agreement”). HVF II is a special purpose financing subsidiary that issues asset-backed notes to finance the acquisition of vehicles, which HVF then leases to Hertz pursuant to the Operating Lease. Hertz entered into the Forbearance Agreement with holders (the “VFN Noteholders”) of notes (the “Series 2013-A Notes”) issued by HVF II representing approximately 60% in aggregate principal amount of the Series 2013-A Notes. Pursuant to the Forbearance Agreement, the VFN Noteholders agreed to forbear from exercising rights to direct a liquidation of vehicles which serve as collateral supporting the Series 2013-A Notes. The agreement with the VFN Noteholders will expire on May 22, 2020 or, if sooner, the date on which Hertz fails to comply with certain agreements contained in the forbearance agreement or another amortization event occurs. As a result of the amortization event that occurred on May 1, 2020, and notwithstanding the Forbearance Agreement, proceeds of the sales of vehicles that collateralize the Series 2013-A Notes must be applied to the payment of principal and interest and will not be available to finance new vehicle acquisitions for Hertz. However, in light of the impact of the COVID-19 global pandemic on the travel industry, Hertz believes it will not need to acquire new vehicles for its fleet through the remainder of 2020.

Concurrently with entering into the Forbearance Agreement, on May 4, 2020, Hertz entered into limited waiver agreements with certain of the lenders under its (i) senior term loan facility, (ii) letter of credit facility, (iii) alternate letter of credit facility and (iv) U.S. vehicle revolving credit facility, pursuant to which the Senior Lenders agreed to (a) waive any default or event of default that could have resulted from the above referenced missed payment under the Operating Lease, (b) waive any default or event of default that has arisen as a result of Hertz’s failure to deliver its 2020 operating budget on a timely basis in accordance with the Senior Facilities and (c) extend the grace period to cure a default with respect to Hertz’s obligation to reimburse drawings that occur under letters of credit during the waiver period. The Waiver Agreements are effective across the Senior Facilities and will expire on May 22, 2020 or, if sooner, the date on which Hertz fails to comply with certain agreements contained in the Waiver Agreements, which include certain limitations on the company’s ability to make certain restricted payments, investments and prepayments of indebtedness during the waiver period and a requirement to deliver certain financial information to the Senior Lenders during the waiver period. There can be no assurances that Hertz will be able to successfully negotiate any further forbearance or waivers extending relief past May 22, 2020.

The Counterparties to the forbearance agreement are:

* Deutsche Bank AG, New York Branch, which serves as administrative agent
* Citibank, N.A.
* CHARTA, LLC
* CAFCO, LLC
* CRC FUNDING, LLC
* CIESCO, LLC
* The Bank of Nova Scotia
* Liberty Street Funding LLC
* Barclays Bank PLC
* Sheffield Receivables Company LLC
* Mizuho Bank, Ltd.
* Goldman Sachs Bank USA
* Credit Agricole Corporate and Investment Bank
* Atlantic Asset Securitization LLC
* Royal Bank of Canada
* Old Line Funding, LLC
* BNP Paribas
* Starbird Funding Corporation
* Lloyds Bank plc
* Gresham Receivables (No. 29) Ltd
* Citizens Bank, N.A.
* Canadian Imperial Bank of Commerce, New York Branch
* HSBC Securities (USA) Inc.
* HSBC Bank USA, National Association
* Truist Bank

Copies of the SEC filing and the forbearance agreements are available at https://tinyurl.com/y92om44v

About Hertz Global Holdings

Hertz Global Holding Inc. is a holding company, originally called Rent-a-Car Inc, founded in 1918 in Chicago. It operates 12,400 locations worldwide as of February 2020. The company owns Rental Car Intermediate Holdings LLC, that owns Hertz Corp., Hertz Global’s primary operating company. It operates in three segments: the U.S. Car Rental (U.S. RAC) segment that engaged in vehicle rental in the U.S.; the International Car Rental (International RAC) segment that engaged in leasing and rental of vehicles internationally; and the All Other Operations segment includes the Donlen Corporation business, that provides fleet management and leasing services.

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In early May 2020, S&P Global Ratings lowered all ratings, including the issuer credit rating on Hertz Global Holdings Inc. and Hertz Corp. to ‘CCC-’ from ‘B-’. All ratings remain on CreditWatch, where S&P placed them with negative implications on March 16, 2020.

“We believe the likelihood has increased that Hertz will engage in a transaction we consider a distressed exchange or a partial debt restructuring. Hertz generates the majority of its revenues at airports globally and relies on airline passenger travel, which has declined sharply due to the impact of the COVID-19 pandemic. At the same time, it relies on proceeds from vehicle sales to service its asset-backed vehicle obligations. However, with the used car market also substantially weaker, Hertz’s liquidity has become severely constrained. We believe it likely will not meet its upcoming financial obligations. We therefore believe the likelihood has increased it will engage in a transaction we consider a distressed exchange or partial debt restructuring,” S&P said.

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