The company has backpedaled from the plan amid criticism.
Near the end of May, car rental service Hertz was forced to file for chapter 11 bankruptcy protection due to the pandemic halting the travel industry. In order to fund its company-wide reorganization, Hertz announced a plan earlier in the week to sell off up to $500 million of their stock, supposedly to raise interest in the company. This turned out to be a poor decision for two distinct reasons.
First and foremost, after the announcement of their plan, the value of Hertz’s stock plummeted 10% to $1.80, beating out the company’s previous record drop on June 4. Investors likely saw the move as desperate, and weren’t interested in stock that could potentially become worthless. This ties into the second reason: pressure from the Securities and Exchange Commission. After a filing with the SEC made on Thursday, Hertz’s board of directors “determined that it was in the best interests of the company to terminate” the selloff.
Due to the value drop and the SEC’s pressure, Hertz’s stock was forced to halt trading on Wednesday and Thursday, though since announcing the cancellation of the selloff, it has resumed normal trading. According to a Wall Street Journal report, Hertz has changed tactics, and is currently pursuing a $1 billion loan to fund its reorganization.