Two things to start:
- I am not a financial advisor. What follows in my interpretation after doing much research and consulting with my broker. Consult yours before making any decisions.
- I own 102,500 shares currently. I really don't care if they go up or down over the next few weeks. They will be worth the same regardless as I plan to hold until the Bankruptcy exit plan is concluded unless the price breaks $12.
Now, what you came here for: How much will I be paid for my shares of Hertz when Hertz executes its exit plan?
There a 3 parts of the pay out:
1) You will be paid $1.53 cash for each share, plus
2) Each shareholder will get an equity distribution on a prorated bases of 3% of the total purchase price of the entire company. Roughly $1.00 per share, plus
3) Then there are the warrants. A little complicated, but hope you follow. Exact wording from the agreement: "Each Eligible Existing Hertz Shareholder, has the right, but not the obligation, subject to and in accordance with the Rights Offering Procedures, to be eligible to subscribe for up to one (1) Rights Offering Share per 0.9554 shares of Existing Hertz Parent Interests that it holds, at a purchase price of $10.00 per share, subject to the individual limits included in the calculations in Item 2 of this Subscription Form." So for example on 100 shares you would get (100/.9554) = 104.6682018002931. Which becomes 104 warrants because all rounding is down downward. Each warrant can then be purchased for $10. Here is the tricky part. You can convert by exercising the warrant, or you can sell the warrant itself. For this example we are going to sell the warrant. And here is why nobody can give you a concrete answer because the value of the warrant is COMPLETE SPECULATION. For my example I am going to assume that the new Hertz, with its reduced debt structure and red hot rental market, will get back to a pre-pandemic level of $20 per share. So you could sell each warrant for a $10 profit. ($20 share price less the $10 warrant purchase.) Just a note: HTZ traded for as high as $46/share in the good times, which is what the new HTZ will be entering. The good times. Low debt. Hot market.
So here is the math on 100 shares:
- $1.53 cash out (x) 100 = $153 +
- $1.00 equity distribution (x) 100 = $100 +
- 104 shares times $10 profit = $1040
Total income from you 100 shares would be $153 + $100 + $1040 = $1293. or $12.93/share.
If you currently owned the 100 shares for todays close price of $6.39 you investment is $639.
So staying it thru until the exit plan concludes and selling your warrants would net you $654 ($1293-$639).
This is why I say I'm a bull on this stock. I believe that the total value of each HTZGQ share is really somewhere between $13-$20 per share. I will not sell unless the $HTZGQ crosses the $12 line before the exit plan is executed. Most estimates you see assume being able to modestly sell your warrants for about $15 per share. Which means a price of around $7-8 ($1.53+$1+$5 warrant profit=$7.53) is the total value. I STRONGLY BELIEVE THAT THIS IS A SEVERE UNDERVALUE.
But regardless, lets just say that the $7-8 is the call. you have a more than 20% upside in the current price of $6.39.
Links to sources:
https://restructuring.primeclerk.com/hertz/Home-DownloadPDF?id1=MTIxODAxMA==&id2=-1
https://restructuring.primeclerk.com/hertz/Home-DownloadPDF?id1=MTIxNTc1NQ==&id2=-1
Submitted May 24, 2021 at 08:47PM by NotanSECgoon https://ift.tt/34fq5Te
