The car rental company, which filed for bankruptcy early in the pandemic and emerged on June 30, has filed documents with the Securities and Exchange Commission for an initial public offering.
The company announced its plans for the IPO in August when it released its second quarter financial results, including revenue that had almost returned to pre-pandemic levels and higher operating profit than ‘before the pandemic. It also had a net loss of $ 168 million caused by $ 633 million in reorganization costs.
The company is benefiting from a shortage of rental cars that drives up the rates incredibly high by historical standards.
When the pandemic nearly brought air travel to a halt, car rental companies had far more cars on hand than they needed, so much so that they were forced to rent space in deserted sports stadium car parks to park their fleet. With so few people traveling, companies sold cars into the used car market to raise the money they needed to survive.
Rental car prices are down 15% from the record set in June, according to the U.S. Consumer Price Index, the country’s main measure of inflation. But rates were still 51% higher in September than in September 2019, before the pandemic, according to CPI. Few products or services are still well above pre-pandemic levels.
Former Hertz shareholders were virtually wiped out by the bankruptcy. Financier Carl Icahn, its largest shareholder, lost about $ 2 billion on his investment when he sold his shares shortly after filing for bankruptcy.
In a short time, however, Hertz became popular with many retail investors, making it one of the first meme titles, a GameStop ( before the actions of video game retailer GameStop got their own roller coaster ride. )
This increase in Hertz shares prompted the company to offer to sell additional shares to raise funds as it struggled to weather the downturn and fund its operations during the pandemic.
Those plans were scrapped when the Securities and Exchange Commission objected, citing the likelihood that shareholders would end up with worthless shares at the end of the bankruptcy process.