HERTZ Global Holdings is exploring options to raise financing weeks after the company’s new chief executive officer pledged to get the company back on track following a failed bet on electric vehicles (EVs), according to sources with knowledge of the matter.
The car rental company is working with financial advisers as it weighs its options, said the sources, who asked not to be identified discussing confidential information. It was not immediately known if Hertz is pursuing new equity, debt or a mix of both.
A Hertz representative declined to comment.
The company’s bonds hit a new low this week after Moody’s Ratings cut its outlook to negative from stable, citing Hertz’s “very weak earnings”. The rating company said: “Improvement in earnings will be very protracted, leaving little cushion for missteps in the execution of the earnings enhancing measures, nor for Hertz to deal with any additional challenges”.
Hertz’s shares fell to a record low in April after it reported a loss that was nearly three times worse than analysts expected as it accelerated sales of EVs to reduce its fleet of Tesla models that have weighed on profits for the past year.
Hertz has been struggling under the weight of a strategic error it made in doubling down on EVs, sinking precious cash into 100,000 Teslas in 2021. The cars proved expensive to operate and later bled value when Tesla cut their prices dramatically.
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Following that blunder, Hertz lost its chief executive officer, began selling cars to shore up cash, and reported in April a monthly depreciation cost of US$592 per vehicle. BLOOMBERG
