Hertz allowed to sell $1 billion in shares despite bankruptcy

Hertz allowed to sell $1 billion in shares despite bankruptcy
Hertz is trying to capitalize on a surge in its volatile stock price since it filed for bankruptcy on May 23. (Reuters)
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Updated 13 June 2020

Hertz allowed to sell $1 billion in shares despite bankruptcy

Hertz allowed to sell $1 billion in shares despite bankruptcy
  • Unusual green light was given by a bankruptcy court in the US state of Delaware
  • Traditionally, shares of bankrupt companies lose value with debt repayment taking precedence

WASHINGTON: Coronavirus-hit car rental company Hertz was granted permission Friday to sell $1 billion in shares, an extraordinary move after it declared bankruptcy in the United States and Canada.
The unusual green light was given by a bankruptcy court in the US state of Delaware, which “held a hearing and approved the Motion,” according to documents filed by Hertz with the Securities and Exchange Commission (SEC).
The company says it will sell the shares at its discretion in terms of timing and volume.
Hertz is trying to capitalize on a surge in its volatile stock price since it filed for bankruptcy on May 23.
Trading at less than a dollar at the end of last week, shares are now worth three times as much, even peaking at $5.53 at the beginning of the week.
On Friday the stock climbed 37.38 percent during the day, but fell 10.5 percent to $2.53 at 2130 GMT in after-market trading.
Traditionally, shares of bankrupt companies lose value with debt repayment taking precedence.
Experts say in Hertz’s case, however, the price has been affected by the abundance of cheap money flooding the economy after the US Federal Reserve turned on the tap to combat the economic impact of the coronavirus pandemic.
Traders after a good deal are also playing a role.
According to the Wall Street Journal, Hertz — which filed for bankruptcy after lockdowns imposed to stop the spread of COVID-19 devastated the car rental industry — is buried under $19 billion in debt.


Careem welcomes Saudization of ride-hailing sector, eyes further investment

Careem welcomes Saudization of ride-hailing sector, eyes further investment
Updated 3 min 14 sec ago

Careem welcomes Saudization of ride-hailing sector, eyes further investment

Careem welcomes Saudization of ride-hailing sector, eyes further investment
  • Careem said the company had been affected by the pandemic because workers stayed at home and cut down on their travel

DUBAI: Ride-hailing service Careem has welcomed a government decision to fully localize the sector in the Kingdom, saying the move will help to create more jobs for Saudi drivers.

The Saudi Ministry of Transport said the new rule would have limited impact as citizens already made up 96 percent of the workforce in the ride-hailing sector.

“We are proud that over 100,000 Saudi nationals are finding income-earning opportunities with Careem each month,” a Careem spokesperson told Arab News. “We’ve worked hand-in-hand with the Transport General Authority and Ministry of Human Resources and Social Development to help the Kingdom achieve its ambitious agenda, and applaud the efforts the government is making to support Saudis working in the ride-hailing sector.”

The spokesperson added that Careem planned to continue investing in the Kingdom with a greater range of transportation and delivery services. 

Although Careem did not give specific numbers for its operations in Saudi Arabia, it said it had 33 million registered users in 13 countries across the region and operated in 28 Saudi cities.

Ibrahim Manna, managing director of global markets at Careem, said the company had been affected by the pandemic because workers stayed at home and cut down on their travel.

“COVID-19 has impacted our ride-hailing, starting in March,” he told Arab News. “This is a natural result of lockdowns, curfews and other limitations of movement, changing user behavior and habits in daily life.”

But while the ride-hailing service decreased, food delivery demand soared.

“Delivery was one of the big growth levers,” he added. “Due to the change in the daily lives and needs of the customer, we adapted quickly and provided them with what they needed most. We partnered up with many stores, pharmacies and restaurants, in order to deliver essentials to citizens in Saudi Arabia during a difficult time.”

On Thursday Mueed Al Saeed, assisting vice president of Land Transport Regulation of the Public Transport Authority, said there were 16 companies including Careem licensed to operate ride-hailing services in the Kingdom.

He also said 300 million trips had been carried out during the past three years, and that there were 250,000 drivers actively working for these services.