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That's what I think most people are missing. A loan comes with an interest rate and repayments. A new offering is just cash minus the fees. It's "free" in terms
by caseysoftware 6y ago
That's what I think most people are missing. A loan comes with an interest rate and repayments. A new offering is just cash minus the fees. It's "free" in terms of future obligations.
If this "IBO" gives Hertz the breathing room to restructure, clean up, and come out the other side, then well done. If not, no one will be surprised. This is almost a "no lose" scenario from the Hertz side.
If this becomes systemic, that's when things get ugly. Imagine senior execs with a "plan" that they have no intent to execute on, making an offering, paying out its bonuses, and then saying "Oops, it died anyway! Sorry!"
- dragontamer 6y agoAlmost all restructurings (Chapter 11 Bankruptcy) results in the share price dropping to $0. The bondholders will benefit from this. But its extremely unlikely for shareholders to benefit. This is a company with $17+ Billion in debt, gaining +$1 Billion from a stock offering won't create any value for the shareholders. --------- Lets do another perspective: If a $1 Billion loan would have fixed the Hertz company, then the company wouldn't need to go bankrupt. The bankers would have simply provided the company another $1 Billion in loans.