%1

Hertz Global Holdings Inc. is seeking debtor-in-possession financing more than two months after filing for chapter 11 protection, reflecting the reality that it still faces trouble ahead if travel doesn’t bounce back, Bloomberg News reported. The bankrupt rental-car giant said in a regulatory filing yesterday that it is looking for new sources of cash with the travel business in a deep slump and proceeds from the sale of its cars going to pay off creditors. Hertz had sought to avoid raising funds while it negotiates a debt restructuring with asset-backed securities holders, but the deterioration in its core rental business and uncertainty ahead leaves it with few options. The company’s revenue fell 67% in the second quarter, pushing it $847 million into the red on a net-income basis. With $1.4 billion in cash on hand, Hertz said that its continued ability to finance operations depends on a recovery in demand in key markets and an extension from creditors of waivers on payments for its cars in continental Europe and the U.K., the filing said. The company said that it saw demand rise every month in the most recent quarter, but it remains below pre-pandemic levels. Without an extension beyond Sept. 30, Hertz must start making payments on its European fleet, which is owned by investors who hold its asset-backed securities. Hertz already has reached an agreement allowing it to use much of its U.S. fleet with a commitment to pay securities holders $108 million a month from July until the end of the year. To do that, Hertz plans to shrink its U.S. fleet by at least another 182,000 vehicles after selling off 100,000 cars in June and July. Read more. 

In related news, Hertz Global Holdings Inc. raised $29 million selling its likely worthless stock before regulators dissuaded the bankrupt rental-car company from selling more, MarketWatch.com reported. The Florida-based company, which filed for chapter 11 protection in May, on Monday disclosed the results of a controversial effort to sell as much as $500 million in shares despite the severe financial strains that drove the company into bankruptcy. Hertz launched the stock sale after its bankruptcy filing, hoping to capitalize on a speculative frenzy fueled by risk-hungry day traders that gave the company a golden opportunity to raise capital it needed to cover its bills. Bankruptcies typically wipe out shareholders, and Hertz warned in June its bankruptcy "may render our common stock worthless." Its shares nonetheless went on a gravity-defying rally after its bankruptcy filing, as investors on the popular Robinhood trading app piled in. Hertz suspended the stock sale after the Securities and Exchange Commission raised questions, but not before issuing 13.9 million shares, netting $29 million, according to a securities filing by the company on Monday. The stock closed at $1.69 on Monday, implying a $240 million market capitalization. Read more. 

Learfield IMG College, the multimedia business that owns broadcast rights for many of the country’s leading collegiate sports programs, is preparing for a possible financial restructuring as the coronavirus pandemic curtails athletics nationwide, WSJ Pro Bankruptcy reported. The company has tapped law firm King & Spalding LLP for advice on renegotiating its obligations. Backed by entertainment giant Endeavor Group Holdings Inc. and investment firm Atairos Group Inc., Learfield relies on collegiate sports competitions that are sure to draw fewer fans and dollars in the fall season, if they are held at all. Investors price the company’s $475 million first-lien loan at around 72 cents on the dollar, according to FactSet, indicating concerns about repayment. A $75 million second-lien loan trades at roughly 48 cents, according to FactSet. While Learfield’s core business is in television, radio and sponsorship rights, the company also makes money on signage and displays inside stadiums, as well as ticket sales and concession services. The Plano, Texas, company has multimedia rights to nearly 200 college teams, as well as the Big 12, Big Ten and A-10 conferences. Athletic departments across the country are curtailing sports activities and haven’t reached consensus on how to put on games safely amid the pandemic. Schools are limiting stadium attendance, canceling nonconference play and sequestering athletes to mitigate the risk of contagion.

A bankruptcy judge has approved the purchase of the XFL by former WWE wrestler Dwayne “The Rock” Johnson, Dany Garcia, and RedBird Capital, NBCSports.com reported. The assets were acquired for $15 million. Unsecured creditors had objected to the sale. With no other viable purchasers, however, the judge approved the bid.

Dwayne “The Rock” Johnson will buy the assets of the bankrupt professional football league XFL as part of a group bid with his business partner Dany Garcia and Gerry Cardinale’s RedBird Capital Partners, Bloomberg News reported. The group is paying $15 million for substantially all of the assets of Alpha Entertainment LLC, the parent company of the XFL, according to a statement yesterday. Johnson and Garcia were looking at buying the XFL at the same time as Cardinale, with the two groups then deciding to join together to complete the purchase, Garcia said in an interview Monday morning. Garcia and Johnson were previously married. “We were simultaneously all examining the property deeply,” said Garcia, who was a big fan of the XFL in its 2020 season and called Johnson when she saw the opportunity to buy it. “We were two groups who could see the magic of this league.” Cardinale is a former Goldman Sachs Group Inc. partner and his private investment firm RedBird manages $4 billion of capital. Cardinale partnered with the Steinbrenner family in 2002 to launch the YES Network, the no. 1 regional sports network in the U.S., according to the Redbird website. The sale is subject to bankruptcy court approval at a hearing Friday and may be completed around August 21. Alpha Entertainment filed for bankruptcy in April after the COVID-19 pandemic forced the shutdown of the league’s first season. The upstart football league was founded in 2017 by promoter Vince McMahon, best known for making professional wrestling into a global business, and played its first game in 2020, according to a court filing. McMahon withdrew his bid to buy the XFL out of bankruptcy in May after opposition from creditors.