(adds details from bankruptcy petition)

By Mike Spector

NEW YORK, May 22 (Reuters) – The more than a century old car
rental firm Hertz Global Holdings Inc filed for
bankruptcy protection on Friday after its business was decimated
during the coronavirus pandemic and talks with creditors failed
to result in much needed relief.

Hertz’s board earlier in the day approved the company
seeking Chapter 11 protection in a U.S. bankruptcy court in
Delaware, according to court records. Its international
operating regions including Europe, Australia and New Zealand
were not included in the U.S. proceedings, the company said.

The firm, whose largest shareholder is billionaire investor
Carl Icahn with a nearly 39% ownership stake, is reeling from
government orders restricting travel and requiring citizens to
remain home. A large portion of Hertz’s revenue comes from car
rentals at airports, which have all but evaporated as potential
customers eschew plane travel.

With nearly $19 billion of debt and roughly 38,000 employees
worldwide as of the end of 2019, Hertz is among the largest
companies to be undone by the pandemic. The public health crisis
has also caused a cascade of bankruptcies or Chapter 11
preparations among companies dependent on consumer demand,
including retailers, restaurants and oil and gas firms.

U.S. airlines have so far avoided similar fates after
receiving billions of dollars in government aid, an avenue Hertz
has explored without success.

The Estero, Florida-based company, which operates Hertz,
Dollar and Thrifty car-rentals, had been in talks with creditors
after skipping significant car-lease payments due in April.
Forbearance and waiver agreements on the missed
payments were set to expire on May 22. Hertz has about $1
billion of cash.

The size of Hertz’s lease obligations have increased as the
value of vehicles declined because of the pandemic. In an
attempt to appease creditors holding asset-backed securities
that finance its fleet of more than 500,000 vehicles, Hertz has
proposed selling more than 30,000 cars a month through the end
of the year in an effort to raise around $5 billion, a person
familiar with the matter said.

On May 16, the board appointed executive Paul Stone to
replace Kathryn Marinello as CEO. Hertz earlier laid off about
10,000 employees and said there was substantial doubt about its
ability to continue as a going concern.

Hertz’s woes are compounded by the complexity of its balance
sheet, which includes more than $14 billion of securitized debt.
The proceeds from those securities finance purchases of vehicles
that are then leased to Hertz in exchange for monthly payments
that have risen as the value of cars fall.

Hertz also has traditional credit lines, loans and bonds
with conditions that can trigger defaults based on missing those
lease payments or failing to meet other conditions, such as
delivering a timely operating budget and reimbursing funds it
has borrowed.

Hertz earlier signaled it could avoid bankruptcy if it
received relief from creditors or financial aid the company and
its competitors have sought from the U.S. government. The U.S.
Treasury has started assisting companies as part of an
unprecedented $2.3 trillion relief package passed by Congress
and signed into law.

A trade group representing Hertz, the American Car Rental
Association, has asked Congress to do more for the industry by
expanding coronavirus relief efforts and advancing new
legislation targeting tourism-related businesses.

Even before the pandemic, Hertz and its peers were under
financial pressure as travelers shifted to ride-hailing services
such as Uber.

To combat Uber, Hertz had adopted a turnaround plan, aiming
to modernize its smartphone apps and improve management of its
fleet of rental cars.

Hertz traces its roots to 1918, when Walter Jacobs, then a
pioneer of renting cars, founded a company allowing customers to
temporarily drive one of a dozen Ford Motor Co Model Ts,
according to the company’s website.
(Reporting by Mike Spector in New York; editing by Grant McCool
& Shri Navaratnam)