UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) November 30, 2020 (
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)
Not Applicable
Not Applicable
(Former name, former address and
former fiscal year, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) |
Name
of Each Exchange on which Registered | ||||
| Hertz Global Holdings, Inc. | * | |||||
| The Hertz Corporation | None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
* Hertz Global Holdings, Inc.’s common stock began trading exclusively on the over-the-counter market on October 30, 2020 under the symbol HTZGQ.
ITEM 7.01 REGULATION FD DISCLOSURE.
As previously disclosed, on May 22, 2020, Hertz Global Holdings, Inc. (the “Company”), The Hertz Corporation (“THC”) and certain of their direct and indirect subsidiaries in the United States and Canada (collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), thereby commencing Chapter 11 cases (the “Chapter 11 Cases”) for the Debtors. The cases are being jointly administered under the caption In re The Hertz Corporation, et al., Case No. 20-11218 MFW.
THC is a guarantor of two series of unsecured notes of Hertz Holdings Netherlands B.V. (“HHN”), an indirect wholly-owned subsidiary of THC organized under the laws of the Netherlands, comprising €225,000,000 aggregate principal amount outstanding of 4.125% Senior Notes due 2021 (“2021 Notes”) and €500,000,000 aggregate principal amount outstanding of 5.500% Senior Notes due 2023 (“2023 Notes”, and collectively with the 2021 Notes, the “HHN Notes”).
THC and HHN, together with certain other Debtors, certain European subsidiaries of HHN and Hertz International Limited (“HIL”), have entered into a lock-up agreement relating to an agreement-in-principle with the largest HHN bondholders for a long-term restructuring and recapitalization of the Company’s European operations (the “Lock-Up Agreement”). Bondholders holding 54% of the 2021 Notes and 56% of the 2023 Notes have signed the Lock-Up Agreement in support of the transaction.
The transaction consists of the following key steps: (a) HIL, the holding company of HHN, will issue €250,000,000 of senior secured notes (the “HIL Notes”) in order to raise new money financing, with such HIL Notes to be issued to certain creditors who elect to participate in such funding and the proceeds of which will be on lent to HHN for use in the Hertz Europe business; (b) Hertz UK Receivables Ltd. (the “Scheme Company”) will seek to implement a scheme of arrangement (the “Scheme”) under English law to effect certain amendments to the terms of the HHN Notes by way of an exchange of the existing HHN Notes for two series of new notes issued by HHN; (c) the Scheme transaction will also facilitate a sale of the guarantee claims held by the HHN Note holders against the US entities who guarantee the HHN Notes resulting in cash payments to partially redeem the HHN Notes and an overall reduction of the amount of claims continuing pursuant to the two new series of notes of HHN; and (d) the relevant subsidiaries and affiliates of HHN will seek to agree to amendment agreements pursuant to (i) certain asset backed securities issued by International Fleet Financing No.2 B.V. and (ii) a vehicle finance facility between Hertz (UK) Limited, Hertz Vehicle Financing UK Limited and Lombard North Central Plc. (the “Facilities”) under which the Facilities provided thereunder will be amended and extended; provided that at this time, the terms of any such amendment and extension are not yet agreed.
To facilitate discussions with certain holders of the HHN Notes prior to entry into the Lock-Up Agreement, HHN entered into confidentiality agreements (the “Confidentiality Agreements”) with certain of such noteholders, requiring HHN to publicly disclose certain information provided to those noteholders (the “Cleansing Material”) upon the occurrence of certain events set forth in the Confidentiality Agreements. The Company is furnishing the Cleansing Material as Exhibit 99.1 hereto. The disclosure herein is being made pursuant to the Confidentiality Agreements.
The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Cautionary Statement Concerning Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of federal securities laws. Words such as “expect” and “intend” and similar expressions identify forward-looking statements, which include but are not limited to statements related to management’s views with respect to future events and the Company’s and HHN’s anticipated financial and operational performance, operational and financial targets, liquidity, capital resources and capital expenditure, planned investments, expectations as to future growth in demand, general economic trends, the impact of regulations and the competitive environment. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including those in our risk factors that we identify in our most recent annual report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 25, 2020, and any updates thereto in the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K. We caution you not to place undue reliance on our forward-looking statements, which speak only as of their date, and we undertake no obligation to update this information.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
| Exhibit | Description | |
| 99.1 | Cleansing materials | |
| 101.1 | Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL | |
| 104.1 | Cover page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HERTZ GLOBAL HOLDINGS, INC. THE HERTZ CORPORATION | ||
| (each, a Registrant) | ||
| By: | /s/ M. DAVID GALAINENA | |
| Name: | M. David Galainena | |
| Title: | Executive Vice President, General Counsel and Secretary | |
Date: November 30, 2020
Exhibit 99.1
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Hertz International – Selected Materials 27 November 2020 |
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THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER (OR ANY FORM OF RECOMMENDATION OR PROMOTION) TO BUY OR SELL SEC URITIES IN ANY JURISDICTION (INCLUDING THE UNITED STATES OF AMERICA). IT IS PROVIDED AS INFORMATION ONLY. This presentation is furnished only for the use of the intended recipient and may not be relied upon for the purposes of ente ring into any transaction or for any other purpose. By attending, viewing, reading or otherwise accessing this presentation, you are agreeing to be bound by these restrictions. Any failure to comply with these restriction s may constitute a violation of applicable securities laws. Certain information herein (including market data and statistical information) has been obtained from various sources. No rep resentation, warranty or undertaking (whether express or implied) is made by Hertz Holdings Netherlands B.V. (the "Company") or its direct or indirect subsidiaries and/or its affiliates (together, the “Group” or “we”) , or by any director, officer, employee, agent, partner, affiliate, manager or professional adviser of any Group company, as to the completeness, accuracy or fairness of the information contained in this presentation or that this pr esentation is suitable for the recipient's purposes. All projections, valuations and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. They may be based on subjective asses sments and assumptions and may use one among alternative methodologies that produce different results and to the extent that they are based on historical information, they should not be relied upon as an accurate predic tion of future performance. This presentation contains a brief overview solely of the matters to which it relates and does not purport to provide a summa ry of (or otherwise to cover) all relevant issues or to be comprehensive, nor does it constitute a "Prospectus" for the purposes of Regulation (EU) 2017/1129. Without limitation to the foregoing, this presentation is not intended to constitute a "financial promotion" (within the meaning of the Financial Services and Markets Act 2000) in respect of any securities. Certain data in this presentation was prepared at earlier dates, including forecasts created in August 2020, and speaks as of such date unless stated otherwise, and contain various forward-looking statements that reflect management’s views with respect to future events and anticipated financial and operational performance and has not been updat ed for subsequent trading or subsequent events, including the impact of coronavirus on operations. This presentation contains various other forward-looking statements that reflect management’s then current views with respect to future events and anticipated financial and operational performance. Forward-looking statements as a general matter are all statements other than statements as to historical facts or present facts or ci rcumstances. Such statements are made on the basis of assumptions and expectations that we believe are reasonable at the time but could prove to be wrong. The words "believe”, "expect”, "anticipate”, "intend”, "may”, "plan”, "estimate”, "will”, "should”, "could”, "aim" or "might”, or, in each case, their negative, or similar expressions, identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements include, among other things, statements relating to our strategy, outlook and growth prospects, our operational and financial targets, our liquidity, capi tal resources and capital expenditure, our planned investments, the expectations as to future growth in demand for our services, general economic trends, the impact of regulations on us and our operations and the competitive envi ronment in which we operate. Although we believe that the expectations reflected in these forward-looking statements were reasonable, when made can give no assurances that they will materialise or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward -looking statements. We expressly undertake no obligation to update or revise any of the information, forward-looking statements or any conclusions contained or implied herein, whether as a result of new information, future events or otherwise, other than as required by law or regulation. Accordingly, investors are cautioned not to place reliance on any of the forward-looking statements herein. This presentation does not constitute an offer or an agreement, or a solicitation of an offer or an agreement, to enter into any transaction (including for the provision of any services) and does not constitute an offer or invitation to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. The information contained herein does not constitute financial product, investment, legal, accounting, regulatory, taxation o r other advice, a recommendation to invest in the securities of any Group company or any other person, or an invitation or an inducement to engage in investment activity with any person, and the information does not take into account your investment objectives or your legal, accounting, regulatory, taxation or financial situation or your particular needs, and consequently the information contained herein may not be sufficient or appropriate fo r the purpose for which a recipient might use it. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the information her ein. You are solely responsible for seeking independent professional advice in relation to the information and any action taken on the basis of the information. Investors and prospective investors in the securities of an y issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such issuer and the nature of the securities. This presentation includes certain financial data that are “non-IFRS financial measures”. These non-IFRS financial measures do not have a standardised meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with International Financial Reporting Standards. Although we believe these non-IFRS financial measures provide useful information to users in measuring the financial performance and condition of the business, you are cautioned not to place undue reliance on any non-IFRS financial measures included in this presentation. This presentation has not been reviewed or approved by any rating agency, note trustee, or stock exchange or by any other reg ulator or person. To the fullest extent permitted by law, each Group company and the directors, officers, employees, agents, partners, affiliates, managers and professional (including financial and legal) advisers of any Group company (together, the "Group Parties"), will have no tortious, contractual or any other liability to any person in connection with the use of this presentation or its contents. The Group Parties accept no liability or duty of care whatsoever to any person, regardless of the form of action, including for any lost profits or lost opportunity, or for any indirect, special, consequential, incidental or punitive damages, arising from any use of this presen tation, its contents or its preparation or delivery or otherwise in connection with it, even if any Group Party has been advised of the possibility of such damages. |
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Hertz International “Managed by HHN” Financials (FY19) Revenue: $1,929m EBITDA: $137m EuropeAPAC Fleet Metrics Avg. Vehicles: 135,277 Utilisation: 77.1% Fleet Metrics Avg. Vehicles: 25,105 Utilisation: 72.3% ■ Our footprint is extensive with over 1,022 sites (exc. Franchise) across Europe consisting of 487 corporate & 535 agency locations, with total headcount of 4,700 |
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USDm FY18 FY19 Act. Act. FY20 FY21 FY22 FY23 (5+7) F'Cast F'Cast F'Cast Revenue Fleet Costs 1,576 1,561 (627) (635) 705 1,178 1,366 1,488 (430) (438) (493) (529) Implied Fleet Gross Profit Operating Costs 950 927 (864) (875) 276 740 872 959 (594) (650) (717) (775) Operating Profit Other Income / Expense Restructuring & Non-Fleet Dep/Int. 86 51 (11) (16) 61 41 (319) 90 156 184 (16) (15) (17) (18) 38 35 38 42 Adjusted Corporate EBIT DA Less: One-offs Less: Franchisee 136 76 (50) (15) (68) (66) (297) 110 177 208 (3) - - - (30) (56) (60) (65) Europe Adj. Corporate EBIT DA Add: APAC 18 (5) 38 29 (330) 54 116 143 (29) 7 24 31 LFL Adjusted Corporate EBIT DA 56 24 (358) 61 141 174 KPIs Operating Margin 5.4% 3.3% (45.2%) 7.6% 11.4% 12.3% EBITDA Margin 8.6% 4.9% (42.1%) 9.3% 12.9% 14.0% LFL Adjusted Corp. EBITDA Margin 6.0% 3.4% (54.9%) 5.7% 12.1% 13.8% Average Vehicles (k) n.a 133 84 98 113 119 USDm FY18FY19 Act.Act. FY20FY21FY22FY23 (5+7)F'CastF'CastF'Cast Adjusted Corporate EBITDA Operating Cash Flow Other Corporate Cashflows 18(5) 317265 (378)(406) (330) 54116143 (108)252303372 936(785)(577)(475) Free Corporate Cash Flow Other Non-Regional Cashflows Debt, Intercompany, Tax and other (43)(146) 64(2) 101184 499(480)(158)40 26 232323 (622)278976 Europe Net Cashflow APAC Liquidity Support 12235 --(97)(180)(38)69 ----Hertz International Net Cashflow 12235 (97)(180)(38)69 ■ The business plan illustrates a route to $170m+ corporate EBITDA by 2023. ■ Adjusted Corporate EBITDA in all years (reported and forecast) includes bond interest (c.$41m p.a., except for FY18 which also included c.$21m of additional redemption and other fees) and fleet interest from the ABS and UK Financing facilities. ■ Cost reductions and other initiatives are material to the projected EBITDA: FY21: +$91m; FY22: +$103m; and FY23: +$103m. ■ We have forecast one-off implementation costs to deliver the turnaround plan of c.$64m. ■ Certain historical EBITDA derived from franchisees is generated for entities outside HHN as franchises are contractually obliged to pay the US brand owner (Hertz International Limited). ■ June/July/August 2020 trading data suggests that we are outperforming our forecast with overperformance in these months against the FY20 (5+7) forecast totalling $16m in revenue and $36m in EBITDA. ■ APAC forecast to contribute c.$31m of EBITDA in FY23 (in line with FY19 levels). |
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Cost Reduction Margin EnhancementTargeted New Business EBITDA Impact ($m) EBITDA Impact ($m) EBITDA Impact ($m) ▪The current savings plan has identified run-rate savings (in FY22) of c.$93m across both regions and central function ▪The run rate savings include c. $58m productivity savings in country, $47m of savings in central functions offset by c.$12m to include risk contingency, and other potential mitigations required to achieve the cost savings ▪Margin enhancement opportunities expected to achieve a c.$7m run-rate uplift. ▪The savings relate to under performing and loss making corporate accounts that are being targeted for re-negotiation. ▪Targeted new business opportunities are expected to grow to $5.5m in FY23. These include: ▪HAS (“Hertz Accident Support”) entering the medium/large insurance partnership market ($2.8m by FY23). ▪Expansion through existing partner base and dedicated marketing resources for Hertz 24.7 ($2.7m by FY23). |
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Summary Europe Performance Improvement USDm Act. Act. FY18FY19 F'CastF'CastF'CastF'Cast 5+7FY21FY22FY23 Fleet Carrying Costs Fleet Related Costs Transaction Variable Opex Opex, SG&A and other, facility cost Commissions Technology / IT 406406 220229 245256 549549 5854 1217 289283322344 141154171185 136191225242 414406430465 23424954 21111314 Total Cost Base 14911510 1024108812101304 Commission % of Revenue3.7%3.4%3.3%3.6%3.6%3.6% savings of $7m through renegotiations of loss making and low margin corporate accounts. ■ Two targeted new business opportunities in the UK requiring limited up-front costs to generate a combined c.$5m of EBITDA (and additional $39m of revenue) by FY23. |
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APAC Revenue & Adjusted Corporate EBITDA: FY21-FY23 323336 245 F 3829 184 7 2430 (29) FY18FY19FY20 (5+7)FY21FFY22FFY23 Revenue ($m) Adjusted Corporate EBITDA ($m) APAC Cashflows: FY21-FY23 9379 24 423329 8186 25 4 (2) 3 (6) (15) (25) 818 400 300 200 100 - 60 40 20 - (20) (40) (98) FY18FY19FY20 (5+7)FY21FFY22FFY23F Operating CashflowsFree Corporate Cashflows (excl. financing)Net Cashflow (inc. financing ■ The APAC business (Australia and New Zealand) reported a $3m closing cash balance as at 31 December 2019. |
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Peak Funding Requirement USDm Sep-21 Sep-22 Sep-23 Corporate Investment in ABS Equity (185) (243) (264) Corporate Investment in Italian Fleet (221) (302) (350) Corporate Investment in Belgium Fleet (12) (24) (30) Corporate Investment in Fleet (418) (569) (644) Other Corporate 78 151 326 Total Liquidity Requirements (340) (418) (318) ■ Italian, Belgian fleet and ABS equity could provide collateral to support $430m-$570m new money to the business during seasonal peaks Note1: Prior to operational liquidity Peak Facility Financing RequirementsItalian, Belgian and ABS Equity Borrowing Base Peak ABS Financing 865 975 1007 Peak Lombard (UK) Financing 260 260 298 USDm FY21 FY22 FY23 Forecast High 430 540 570 Forecast Low 170 240 262 Note1: ABS Financing in excess of current limits by c.$195m in FY21 |
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■ The business has recently assessed the potential impact on recent adverse Covid headwinds on its FY21 projections. ■ Two downside scenarios to the August 2020 Business plan have been modelled (‘Moderate’ and ‘Severe’) ■ The resulting output under both scenarios is: — A slower FY21 revenue recovery vs. FY19; — Reduced FY21 EBITDA from lower revenue and mix changes (but an assumed return to traditional revenue mix from FY22); and — Reduced funding requirement in FY21 (fleet driven) but with a higher FY22 and FY23 funding requirement due to increased FY21 operational cash burn. ■ The FY21 revenue recovery relative to FY19 under each scenario is: — Business Plan (August): 75% of FY19 — Moderate Downside: 58% of FY19 — Severe Downside: 49% of FY19 ■ We have largely retained our FY22 / FY23 forecasts, updating for the latest cost initiative information and the flow through impact of revised fleet and WCAP balances from the reforecast FY21. |
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USDm FY21 FY22 FY23 Revenue Business Plan 1,178 1,366 1,488 Moderate Downside Scenario 907 1,270 1,374 EBITDA Business Plan 54 116 143 Moderate Downside Scenario (16) 90 118 Key Financial Information ($) ■ The Moderate Downside assumes that: — Lower potential FY21 activity levels in light of the Covid second wave and a resulting mix change toward more stable volume segments (reduced Leisure, partial offset from Commercial, Vans); — Constraint of UK fleet and Italian seasonal in-fleeting to mitigate overall funding requirements; and — Incorporating updates (e.g. quantum / phasing of cost initiatives) and other items previously presented as overlays to the business plan. Business Plan (354) (424) (335) — Reduce FY21 revenue by $271m (c.58% of FY19); and Moderate Downside Scenario (250) (442) (457) Financing Requirements (€) EURmSep-21Sep-22Sep-23 Corporate Liquidity — Reduce FY21 EBITDA by $70m in FY21 with further reductions of c.$25m in FY22 and FY23. ■ Peak corporate funding (including operational headroom of €50m) in September FY21 improves by €104m, however higher operational cash burn results in an increased funding requirement in FY22 and FY23. Note: Includes €50m of operational headroom and foreign exchange rate of USD:EUR of 1.1176 Italian, Belgian and ABS Equity Borrowing Base1 (€) EURm FY21 FY22 FY23 Borrowing Base August Business Plan. Note: Foreign exchange rate of USD:EUR of 1.1176. Note 1: Italian and Belgium Assets as at 16th of October are €203m |
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Severe Downside ScenarioKey Financial Information ($) ■ The Severe Downside assumes that: — Further revenue reductions incremental to the Moderate Downside resulting in total revenue being 49% of FY19 in FY21 (no additional changes to FY22 and FY23); and — Soften the quarter-on-quarter recovery based on the following approximate levels: Q1: 40% of FY19, Q2: 45% of FY19, Q3: 50% of FY19 and Q4: 60% of FY19. ■ The impact of the illustrative Severe Downside scenario (relative to the Moderate Downside scenario) is to: — Reduce EBITDA by $32m in FY21 (no material change in FY22 and FY23); and — Reduce net cash flow (including debt movements) by $52m from FY21-23 with reduced fleet outflows in FY21 largely offsetting the EBITDA decline (but not from FY22 onward as ■ Peak corporate funding (including operational headroom of €50m) in September FY21 improves by c.€40m, however higher FY21 operational cash burn results in a higher funding requirement of c.€47m in FY22 and FY23. ■ When compared to the Moderate Downside scenario, ABS requirements reduce by a further c.€145m in FY21 only, no change to Lombard. USDm FY21 FY22 FY23 Revenue Business Plan 1,178 1,366 1,488 Moderate Downside Scenario 907 1,270 1,374 Severe Downside Scenario 769 1,270 1,374 EBITDA Business Plan 54 116 143 Moderate Downside Scenario (16) 90 118 Severe Downside Scenario (48) 90 119 Financing Requirements (€) EURm Sep-21 Sep-22 Sep-23 Business Plan (354) (424) (335) Moderate Downside Scenario (250) (442) (457) Severe Downside Scenario (211) (489) (504) Note: Includes €50m of operational headroom and foreign exchange rate of USD:EUR of 1.1176 Fleet Moderate 81 101 106 Severe 70 101 106 |
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Overview ■ Liquidation analyses have been produced which reflect a theoretical scenario of group -wide liquidation of HHN and its subsidiaries (excluding Canadian entities) and Hertz Asia Pacific (including New Zealand Holdings Limited and its subsidiaries) (the ‘Inte rnational Group’), via uncoordinated / uncontrolled insolvencies in the event a consensual restructuring is unsuccessful. All US / Canadian / Puerto Rican / Brazilian entities within the Group are excluded. ■ In this scenario, without access to central funding, branding and support as well as access to the vehicle fleet (where secur ed to the ABS lenders), Opcos are assumed to immediately cease trading, with the exception of Germany (assumed to trade for a further two m onths). All assets would be liquidated, with Low and High Cases created to reflect a potential range of recoveries given the uncertainty in coordinating / monetising assets. ■ This analysis represents a point in time illustration (31 May 2020) of an inherently uncertain scenario with a number of simp lifying and subjective assumptions. A further analysis for September has been created based on forecast values, with only certain key balances updated. This is for directional guidance only. Illustrative Notes Recoveries ■ The table below illustrates indicative ranges of recoveries to noteholders based on the May and September illustrative analys es. ■ It is estimated that recoveries for certain stakeholders will deteriorate between May and September as the International Group continues to undertake large scale de-fleeting, with the cash generated in this period being utilised by the International Group to support trading and amortise secured facilities (UK Lease Financing and ABS) that have stepped down in this period. May September Illustrative |
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Sources of Value and Recovery Drivers (NB: all figures as at 31 May 2020) ■ The Principal source of value is fleet vehicles ($1.6bn), realised over a 4-6 month period with recoveries varying according to either buy-back or “risk” arrangements. The vast majority of vehicles are secured under an ABS save for Italy / Belgium. ■ Receivables associated with vehicle disposals ($352m) and customer receivables from delivered corporate rentals ($117m) are a ssumed to be largely collectible as limited grounds for set-off are assumed. ■ Cash is the key variant between Low and High Case scenarios. Unrestricted cash of $226m is available for creditors in the Hig h Case scenario, comprising 13% of total recoveries. In the Low Case, cash is assumed to be nil, reflecting future uncertainty over the amount and location of cash in the event of any insolvency filing. Realisations by Asset Type - High Case, May 2020 Fleet Customer Cash and Cash Total $m Fleet, Net Receivables Receivables Equivalents Other Assets Realisations Fleet Recoveries ■ With over 113,000 vehicles across 18 entities in 9 countries, identifying, locating, collecting and monetising the Fleet would be challenging. The volume of vehicles poses significant challenges to the Liquidation Agents / IPs, particularly around the ide ntification, location and collection of vehicles. ■ The material risk to recoveries is the scale of the de-fleeting in 4-6 month period as part of a group wide liquidation, creating over supply in the market and depressing resale values. Buyback vehicles are assumed to largely retain their value whilst risk vehicle re-sale values are discounted at a higher rate (following discussions with members of the management team and consideration of the market) t o reflect market saturation risk and depreciation during the disposal period. ■ Overall, vehicles are assumed to be realised for 66% of value in the High Case, representing depreciation discounts, ROT clai ms, potential damage as well as the collection and monetisation difficulties discussed above. |
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Appendices |
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Appendix A: International Business Short-term Cashflow Forecast International 13 Week STCFF 13 November 2020 to 5 February 2021 (€ in millions) Total 13 wks Beginning Cash as at 13-Nov-20 (excl. cash in local entities) Receipts Non-fleet Disbursements 210 171 (292) Net Total Receipts & Disbursements Net Fleet Activity Other Cashflows (121) 17 (19) Total Net Cashflows (123) Ending Cash Balance 5-Feb-21 (excl. cash in local entities) 87 ■ Controlled de-fleeting reduces ABS exposure through Q4 and Jan-21: ■ Nov-20: €247m; ■ Dec-20: €201m; and Total Liquidity post FX104 ■ Jan-21: €185m 15 |
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IApex EUR 400,000 EileoSAS Hertz Holdings Netherlands B.v. EUR - HCMSRL EUR - Hertz Accident Support Ltd GBP Hertz Australia Ptv. Limtted AUD 75,000,000 Hertz Automobielen Netherlands BV EUR 152 587 407 Hertz Autopozicovna s.r.o. EUR - Hertz AuiOpU jCOvna S.LO. CZK 52 500 000 Hertz AutovennietullQ GmbH EUR Hertz Belcium BVBA EUR 8 655 008 Hertz Claim Manaqement BV EUR - Hertz Claim Manaoement BVBA EUR 28,381 HERTZ Claim Management GmBh EUR 1,410,210 Hertz Claim Management Limited GBP 103,319 Hertz Claim ManaQement SAS EUR 512,361 Hertz de Espana SL EUR 53,350,519 Hertz Europe Ltd GBP 23.406,389 Hertz Europe Service Centre Ltd (CAD) EUR 29,550,000 Hertz Europe Service Centre Ltd (HS1) EUR 25,672,512 Hertz Finance Centre Ltd. EUR - Hertz Fleet aliana S.R.L. EUR 12,550,746 Hertz France SAS EUR 62,233,328 Hertz Holdincs New Zealand Ltd NZD 20,425,912 Hertz lntennalional Ltd USD 35,000,000 Hertz aliana S.r.l. EUR Hertz Luxemoourc SAR.L. EUR 192,945 Hertz MJnaco SAM EUR - Hertz UK Ltd GBP - Probus nsurance Company Ltd. EUR - Puerto RicanCars nc. USD 8,100,000 EUR - · •1<ro1 Eeo SAS EUR923,490 Hertz Accident Support Lid GBP 4,430.178 Hertz Autovennietung GmbH EUR 45,915.212 Hertz Belaium BVBA EUR 19 332 428 Hertz Claim ManaoemenlBVEUR 129 555 Hertz Claim Management BVBA EUR Hertz Claim Management SL EUR 140,000 Hertz Holdings Hertz de EsJlana SL EUR16.859,669 Netherlands B.V. Hertz Fleet nait ana SRL.EUR 191,312,524 Hertz France SASEUR Hertz aliana S.r.l.EUR 23,520.948 Hertz Luxemboor<lSAR.L.EUR 601,814 Hertz UK Lid GBP 69,387,785 Hertz UK Receivables Limtted GBP 6,118,873 . . 1111=111• -:• - - •l't'J -I .. . Sturrgroep Holland BV EUR 104,580,033 . :1 .·: Sturrgroe.p H.olland BV Hertz .......... CAA AEnTAL ,._,..... CAR RENTAL . # •:;:, DONLEN A Hertz Company16 |
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HIL Income Statement Historical & ForecastHIL Primary activities and functions USDm FY18A FY19A FY20F FY21F FY22F FY23F HIL Franchise income 80 A38 53 74 81 HIL Assessment fees 49 23 30 41 44 Total Revenue 142 128 62 83 115 125 Advertising fund allocation (37) (34) (19) (17) (22) (23) Other expenses, net (9) (8) (5) (6) (7) (8) Total Expenses (46) (42) (24) (23) (29) (31) Dividends - - 31 - - - EBITDA/Pre-tax income 96 87 68 61 87 94 Tax (10) (27) (20) (18) (26) (28) Net income 86 60 47 42 61 66 — Franchisor for overseas franchise arrangement (EMEA, LatAm, Canada, Puerto Rico) (“License Revenue”)) — Mostly brand licencing for EMEA RAC countries (3% royalty fee - “Assessment fees”) (intercompany revenue at a THC level) HIL licence/franchise income FY19 Region USDm EMEA 60.0 LatAm 15.9 ■ Meets the cost of certain European advertising activities performed in Europe on behalf of the global brand (under an Advertising & Marketing Services Agreement between HIL and HEL) (“Advertising Fund Allocation”) ■ Aggregates intercompany charges between THC, Hertz Europe Limited (HEL), Hertz Europe Service Center (HESC), and foreign RACs APAC 3.9 Total 79.8 HIL component of APAC licence fee A — These ultimately net down to an immaterial impact on HIL EBITDA Cash Flow ■ Cash flow projected to be 100% of post tax income |
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HIL Balance Sheet USDm Dec-19 Jul-20 Cas h 1 14 Receivables 21 13 Intercom pany trade 3,218 3,220 Intercom pany loan 328 363 Inves tm ent in Subs idiaries 96 96 Other as s ets 3 4 GoodWill 2 2 Total assets 3,669 3,713 ■ HIL net assets of $1.6bn comprise primarily a net $1.2bn trade receivable form THC ($3.2bn receivables less $2.0bn payable) and $0.3bn of Intercompany loan. ■ HIL cash-settles all charges and re-charges with HEL, HESC and local RACs on a monthly basis Intercom pany Payables Trade2,0141,974 Intercom pany Payables Loans-35 Taxes(12)(11) Others 21 22 Total Liabilities2,0232,021 Total Equity1,6451,693 ■ Historically, the residual cash in HIL was swept to THC. This is switched off prior to Ch11 filing and has not resumed. Intercompany breakdown USDm (as at Dec-19) Receivables Payables Net position The Hertz Corporation 3,199 (1,999) 1,200 Hertz Europe Lim ited (7) (0) (7) DTG Operations , Inc. 0 (7) (7) Hertz Europe Service Centre Lim it (5) (0) (5) HIRE BERMUDA USD 5 - 5 Hertz France SAS 5 (0) 4 Hertz Autoverm ietung Gm bH 3 (0) 3 Hertz Italiana S.r.l. 3 (0) 3 Executive Ventures , Ltd. - (2) (2) Hertz Aus tralia Pty. Lim ited 3 (0) 2 Others 12 (4) 8 Total 3,218 (2,014) 1,204 |
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International Segmental reportingBusiness Plan: EMEA Adjusted Corporate EBIT DA USDm FY19 USDm FY19 Adjusted Corporate EBITDA (segment reporting) A76 Business Plan: APAC USDm FY19 Adjusted Corporate EBITDA (segment reporting) B38 Less: Other APAC entities (1) Less: Franchise Income [not contractually in APAC] (9) LFL Adjusted Corporate EBITDA - Business Plan 29 |
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12 3 2 10 FY19 Revenue (USDm) Number of contracts expiring 6 2 4 21 0 2020202120222023Beyond 2023 Year of expiry of which c.70% (by revenue) expires in FY37, c. 30% in FY28 |