The company steps back from the decision amid criticism.
In late May, Hertz, the car rental service, had to file for chapter 11 bankruptcy protection due to the impact of the pandemic on the travel industry. To support its restructuring efforts, earlier this week, Hertz had announced a plan to sell up to $500 million of its stock in order to generate interest in the company. However, this decision was met with backlash for two main reasons.
Firstly, following the announcement of the stock sale plan, Hertz’s stock price dropped by 10% to $1.80, surpassing its previous record decline on June 4. Investors perceived this move as a sign of desperation, leading them to lose interest in owning stock that could potentially be of little value. This brings us to the second reason: pressure from the Securities and Exchange Commission (SEC). In response to a filing made with the SEC on Thursday, Hertz’s board of directors decided that ending the stock sale was the best course of action for the company.
As a result of the stock value decrease and the SEC’s intervention, trading of Hertz’s stock was suspended on Wednesday and Thursday. However, following the announcement of the sale cancellation, trading has resumed as usual. As reported by The Wall Street Journal, Hertz is now focusing on securing a $1 billion loan to support its restructuring process.
