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You are here: Home / Finanace / Financially troubled Hertz announces plans to sell Donlen fleet leasing business

Financially troubled Hertz announces plans to sell Donlen fleet leasing business

November 28, 2020 by Retirement

Financially-troubled Hertz has announced plans to sell its Donlen fleet leasing and management subsidiary.

Estero-based Hertz Global Holdings – parent of The Hertz Corp. – has entered into a stock and asset purchase agreement with Athene Holding Ltd., a leading financial services company based in Bermuda.

With adjustments for fleet equity, working capital and assumed debt, Hertz Global expects the deal to bring a purchase price of at least $875 million.

In a news release, Hertz Global’s president and CEO Paul Stone said the sale will be “another significant accomplishment” in its road to recovery.

Hertz Global filed for Chapter 11 bankruptcy under a mound of debt in May totaling roughly $19 billion after taking a big hit from the coronavirus pandemic, which put the skids on travel.

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The Donlen subsidiary was a part of the filing, along with Hertz Global’s more well-known car rental business, which operates the Hertz, Dollar and Thrifty brands.

The deal to sell Donlen follows several other key steps Hertz Global has taken in its financial restructuring efforts. The bankruptcy court recently approved $1.65 billion in new financing offered by some of the company’s first-lien, or first-in-line, lenders before the Chapter 11 filing – and a separate $4 billion financing deal to refresh Hertz’s fleet.

The Donlen sale will position Hertz Global and its rental business for the future, Stone said.

“We believe this transaction provides significant additional flexibility to help us achieve our strategic and financial objectives,” he said. “At the same time, customers will continue to be able to benefit from Donlen’s commitment to excellence in fleet management solutions and service.”

In the news release, Tom Callahan, Donlen’s president, said the sale will position the longtime fleet management and leasing business for “continued long-term success.”

“Our fleet customers remain our top priority and we look forward to continuing to be a trusted partner providing high levels of customer satisfaction, impactful technology and fleet solutions,” he said.

In the news release, Athene’s chairman and CEO Jim Belardi said the deal will help his company meet its objective of “sourcing attractive, differentiated long-term investments for our growing portfolio.”

Athene, he said, plans to invest about $1 billion up front to strengthen Donlen’s balance sheet and growth potential – and it’s prepared to invest another $2 billion to grow the fleet.

“We plan to support Donlen with resources to invest in technology and grow their team, which will enable them to continue offering best-in-class service to their long-standing customer base,” Belardi said.

Hertz Global struck the agreement with Athene after marketing Donlen for sale.

The agreement is expected to go before the bankruptcy judge at a hearing Dec. 16. If approved, it would serve as what’s known as the “stalking horse bid,” or first bid, in a court-supervised sales process, which would establish a minimum price for Donlen and allow others to submit competing offers.

Hertz said it’s committed to receiving the highest and best offer for its Donlen business.

Donlen, based in Illinois, has been named one of the Best and Brightest Companies to Work for in Chicago and in the nation for six years in a row. The company has been in business for more than 55 years.

Hertz acquired Donlen in September 2011 for $250 million, assuming approximately $680 million of its outstanding fleet debt.

Athene, a leading annuity provider, was founded in 2009 amid the financial crisis, filling the “need for a well-capitalized company with an experienced management team to fill the void” when other companies exited the industry in the U.S. during the Great Recession, according to its website.

As of Sept. 30, Athene had total assets of $191.1 billion.

While based in Bermuda, the company also has operations in the United States. Company shares trade on the New York Stock Exchange.

Meanwhile, Hertz’s shares now trade on the Over-the-Counter Bulletin Board, or pink sheets.

They were removed from the New York Stock Exchange after staff found them “no longer suitable for listing,” due to Hertz’s Chapter 11 filing.

This article originally appeared on Naples Daily News: Hertz Global Holdings looks to sell Donlen in $875 million deal

Filed Under: Finanace

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