Hertz Global Holdings saw its stock fall more than 20% in after-hours trading Monday after it emerged that the rental car company has reportedly taken another step towards a potential bankruptcy filing.
Hertz is said to have retained management consulting giant FTI Consulting to help streamline and restructure operations in advance of an increasingly likely Chapter 11 filing, the Wall Street Journal reported on Monday, citing sources familiar with the matter.
The publication first reported that Hertz was preparing for bankruptcy last month after the rental car firm failed to make lease payments on its fleet of rental cars. In addition to FTI, Hertz is reportedly working with law firm White & Case and investment bank Moelis & Co. as it looks to restructure $17 billion of debt on its books.
Hertz—which in addition to its eponymous rental brand also owns and operates Thrifty Car Rental and Dollar Rent A Car—has been devastated by the coronavirus pandemic and the subsequent economic shutdown. Rental-car ridership has plummeted as travel and tourism has come to a relative standstill during the pandemic, leaving Hertz to lay off 10,000 employees last month.
The company’s stock price has reflected these challenges: It’s swooned from its 52-week high of nearly $21 per share in late February, just before the gravity of the pandemic became apparent and sent markets globally into freefall. Hertz’s stock closed at $3.59 per share on Monday—and the news that FTI has been brought in to advise on a bankruptcy filing sent that even lower after hours, to well under $3 per share.
Hertz and other rental car companies were already losing market share even before the pandemic, as the rise of ride-sharing firms like Uber and Lyft have gradually eaten away at their business. Hertz ranked #331 on the 2019 Fortune 500, up four places from the previous year with revenues exceeding $9.5 billion.
Representatives for Hertz did not immediately return a request for comment.
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