Apollo Global Management Inc. is poised to mint a big return on a less-than-five-month investment in Hertz Global Holdings Inc.’s turnaround after the rental car company said it would incur new debt to redeem preferred shares issued when it exited chapter 11, WSJ Pro Bankruptcy reported. Hertz said yesterday that it would issue $1.5 billion in new bonds to redeem preferred stock that Apollo issued to help lift Hertz out of bankruptcy this summer. The company will pay a 25% premium for early redemption of the preferred shares, along with consent and amendment fees totaling 2.5% of the face value of Apollo’s $1.5 billion investment, according to securities filings. All in, Apollo can expect a 70% annual rate of return on its investment in Hertz, based on the redemption premiums and the short duration of the investment, the company’s bondholders said in a bankruptcy-court hearing last week. Hertz had said earlier this month, when it announced plans to list its common stock on the Nasdaq, that it would redeem the preferred shares. Read more.
Didn't catch ABI's "Anatomy of the Hertz Chapter 11" webinar? Watch a replay a here.
