Hertz tanks 25% after filing to sell up to $500 million in potentially 'worthless' stock
- Hertz, the bankrupt car-rental company, on Monday filed to sell up to $500 million in new shares.
- The stock fell nearly 25% in premarket trading Monday.
- The move comes just after Hertz shares surged nearly 70% Friday when the company won bankruptcy court approval to sell up to $1 billion in new shares.
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Shares of Hertz, the bankrupt car-rental company, plunged nearly 25% in early trading to $2.14 per share Monday after it filed to sell up to $500 million in new common stock.
The move also comes after Hertz on Friday won bankruptcy court approval to sell up to $1 billion in new stock, capitalizing on the company's recent rally as retail investors pile into the risky shares.
The company warned Friday that the new common stock could "ultimately be worthless" due to Hertz's bankruptcy proceedings — shareholders are paid out any additional cash only after debts are squared with lawyers, suppliers, and creditors. This means that those who hold stock in a bankrupt company are often left empty-handed.
Hertz said in the Friday filing that if any sales of the stock are made, they will be made "by any method permitted by law" deemed to be an "at the market offering." Jefferies is acting as the company's agent in the offering.
Hertz shares have seen volatile swings in recent weeks following the company's May 22 bankruptcy filing. Shares fell to an all-time low close of 56 cents following the bankruptcy filing, then surged as much as 887% to close at $5.53 on June 8 before paring gains in three following sessions.
Hertz has shed roughly 86% year-to-date.
