WASHINGTON D.C.: Rental car company Hertz, which filed for bankruptcy early in the pandemic, emerging on 30th June, has filed paperwork with the Securities and Exchange Commission for an initial public offering (IPO).
Benefiting from a shortage of rental cars, the company released a positive financial report in August and signaled its plans for the IPO, despite posting a net loss of $168 million caused by $633 million of reorganization expenses.
The COVID-19 pandemic brought air travel to a standstill and forced rental car companies to rent space in the parking lots of deserted sports stadiums to park their unused fleets. They also sold some cars to the used car market to raise capital.
But once travel restarted, a computer chip shortage affected automakers and limited the number of new cars being assembled. Rental car companies were, subsequently, unable to replenish their fleets.
According to the U.S. consumer price index, rental car rates dropped 15 percent from a record high in June, but were still 51 percent higher in September than in September 2019 before the pandemic.
The bankruptcy caused considerable losses to Hertz's previous shareholders. Its largest shareholder, Financier Carl Icahn, lost some $2 billion when he sold his stock soon after the bankruptcy filing.
However, the stock quickly became popular with many retail investors, and the rise in its shares prompted the company to propose selling additional shares to raise funds to ride out the downturn and finance its operations during the pandemic.
However, this plan was scrapped after the Securities and Exchange Commission objected, citing the likelihood that shareholders would be left with valueless stocks after the bankruptcy process.