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NEW YORK — Shares of Hertz Global Holdings Inc. tumbled on Wednesday after the car and equipment rental company announced that it plans to sell shares and convertible notes to raise cash.
Hertz shares dropped $1.38, or 17 percent, to close at $6.76. The stock has traded between $1.55 and $14.69 during the past 52 weeks.
Hertz said late Tuesday that proceeds from the stock and debt offering will be used to boost liquidity and for general corporate purposes, including to repay debt. After the market closed Wednesday, Hertz said total proceeds from the newly expanded offerings would total $749 million, excluding any overallotment options that may be exercised by underwriters, which would add about $112.4 million to the total proceeds.
The Park Ridge, N.J.-based company plans to offer 46 million common shares to the public at $6.50 each. The underwriters will have a 30-day option to buy an additional 6.9 million common shares.
Hertz also is offering $450 million in convertible senior notes due June 1, 2014. The underwriters will have a 30-day option to buy another $67.5 million in the senior notes.
JPMorgan, Goldman Sachs, Merrill Lynch and Barclays Capital are serving as the joint book-running managers for the offering.
In addition, investment funds associated with Clayton, Dubilier & Rice and The Carlyle Group, both major stockholders, are expected to buy millions in common stock at about the same time — boosting total capital raising efforts to $949 million, Hertz said.
As of March 30, Clayton, Dubilier & Rice fund held an 18.6 percent stake in the company. Carlyle Group-related funds held an 18.3 percent stake.
In late April, Hertz posted a wider-than-expected first-quarter loss but said demand for cars and equipment may be starting to stabilize. The company noted that it has cut jobs, reduced wages and benefits and closed unprofitable locations, among other steps, to improve its results over the past few months.
Chairman and Chief Executive Mark Frissora also expressed confidence that Hertz will successfully refinance its debt due in 2010.
