Again: I am a guy with Google. Not a financial analyst. Please consult yours before you invest.
So, just to catch anyone up who is just joining:
Hertz filed for bankruptcy.
Turns out they were not that bankrupt.
Everybody is getting made whole except for the shareholders.
Shareholders of Class 11 stock that pre-pandemic traded at $20 (now trading $6) are getting bought out.
The payout is in three parts:
1) Cash in the amount of $1.53 per share, plus
2) Pro Rata shares of (a) 3% of the Reorganized Hertz Parent Common Interests (estimated to be $1 per share), plus
3) Either:
a) 30-year warrants for 18% of the equity in the Reorganized Debtors struck at an equity value of $6.5 billion, or
b) rights to participate in a $1.635 billion offering for approximately 35% of Reorganized Hertz Parent Common Interests at a per share price based on a total equity value of approximately $4.7 billion. (Subscription Rights)
This post is a "deep dive"/"open discussion" of the third portion above in bold.
a) 30-year warrants - waiting for confirmation. It is believed that these warrants have a strike price of $10. So, an example would be a Warrant is issued with a strike price of $10. New Hertz shares are trading at $15 per share. Warrants can be sold or executed. If sold, warrants typically sell for market price less strike price. So, each warrant would be worth $5. Add to the cash of $1.53 + the equity distribution of $1. Total value $7.53.
b) Subscription rights - there are 2 types of subscription rights
1) Eligible Shareholder - accredited investors and institutions. Look it up yourself if you don't know if you are. But basically, you must be a broker, bank or have a net cash worth of $1,000,000.
2) Ineligible Shareholder - everybody else. Probably 99% of the people reading this post.
What I know about subscription rights:
Basically, what I learned today is that you can participate in an auction prior to the conclusion of the bankruptcy for share in the new company.
If you are an Eligible shareholder, you can enter a maximum auction price. If the auction goes above the price you set, then you do not purchase any shares.
If you are an Ineligible shareholder, you can enter a minimum auction price. If the auction does not get to the price you set, you automatically are issued New Warrants in the Hertz.
Actual language below.
Item 9. Election Form for Ineligible Existing Hertz Shareholders
The undersigned is an Ineligible Existing Hertz Shareholder and elects to sell its Subscription Rights pursuant to the Shareholder Subscription Rights Auction as follows:
$__________ per Subscription Right (the “Minimum Auction Price”)
________________ Subscription Rights
To calculate the maximum number of Subscription Rights that an Ineligible Existing Hertz Shareholder may elect to sell, an Ineligible Existing Hertz Shareholder should multiply the number of Existing Hertz Parent Interests that it holds by 1.0467.
Note: If you are an Ineligible Existing Hertz Shareholder and do not wish to elect to have your Pro Rata share of the Shareholder Subscription Rights sold pursuant to the Shareholder Subscription Rights Auction described below, no action is necessary, and you do not need to return this form.
Item 10. Election Form for Eligible Existing Hertz Shareholders
The undersigned is an Eligible Existing Hertz Shareholder and elects to purchase Subscription Rights (if any) pursuant to the Shareholder Subscription Rights Auction as follows:
$_________ per Subscription Right (the “Maximum Auction Price”)
Up to ________________ Subscription Rights
Note: If you are an Eligible Existing Hertz Shareholder and do not wish to elect to purchase Shareholder Subscription Rights that may be sold pursuant to the Shareholder Subscription Rights Auction, no action is necessary, and you do not need to return an election.
Please feel free to discuss. I am personally leaning towards the New Warrants. I am a shareholder and bullish on Hertz.
Submitted May 28, 2021 at 10:01PM by NotanSECgoon https://ift.tt/3yLauJ3
