ESTERO, Fla. and PEMBROKE, Bermuda –
A day before Thanksgiving, Hertz Global Holdings announced that it has entered into a stock and asset purchase agreement to sell substantially all of the assets of its wholly owned subsidiary, Donlen Corp.
However, a bankruptcy court has to approve the deal that could be valued as much as $875 million.
Should the deal go through, Donlen would be sold to Athene Holding, a leading financial services company, for an anticipated cash payment of $825 million subject to adjustments for fleet equity, working capital and assumed debt.
Hertz said that it anticipates that these adjustments will result in a purchase price at closing of at least $875 million.
Hertz said the agreement with Athene was reached following an initial marketing process. If approved by the bankruptcy court at a hearing anticipated for Dec. 16, the company said the agreement with Athene will serve as the “stalking horse bid” in a court-supervised sales process, and the agreement will establish a minimum sale price for Donlen.
Hertz said that it expects to conduct a competitive auction process pursuant to bidding procedures that will be subject to approval by the bankruptcy court to ensure Hertz receives the highest and best offer for the Donlen business.
“The agreement to sell our Donlen business is another significant accomplishment for Hertz during our financial restructuring, following the $1.65 billion debtor-in-possession financing and $4 billion fleet financing recently approved by the bankruptcy court,” Hertz president and chief executive officer Paul Stone said in a news release.
“As we continue to work to position Hertz and our business for the future, we believe this transaction provides significant additional flexibility to help us achieve our strategic and financial objectives,” Stone continued. “At the same time, customers will continue to be able to benefit from Donlen’s commitment to excellence in fleet management solutions and service.”
Donlen president Tom Callahan shared his perspective on what the pending transaction could do for the fleet-management company.
“We are pleased with this opportunity to position Donlen’s business for continued long-term success and appreciate Athene’s commitment to continuing our tradition of high-quality service, customer satisfaction and award-winning fleet management, working with our talented employees,” Callahan said.
“Our fleet customers remain our top priority and we look forward to continuing to be a trusted partner providing high levels of customer satisfaction, impactful technology and fleet solutions,” he added.
Finally, Athene chairman and chief executive officer Jim Belardi touched on what possibly adding Donlen to the company’s portfolio could do to that organization.
“We are excited about the opportunity to partner with the strong team at Donlen to acquire an industry leading fleet management franchise that is well-suited to meet our objective of sourcing attractive, differentiated long-term investments for our growing portfolio,” Belardi said
“In support of the business, strengthening the balance sheet and its significant growth opportunity, we are making an upfront investment of approximately $1 billion, and we are prepared to provide incremental capital that would support approximately $2 billion of additional growth in the fleet,” he continued.
“We plan to support Donlen with resources to invest in technology and grow their team, which will enable them to continue offering best-in-class service to their long-standing customer base,” Belardi went on to say.
White & Case LLP is serving as Hertz’s legal advisor, Moelis & Co. is serving as investment banker and FTI Consulting is serving as Hertz’s financial advisor.
Information related to the Chapter 11 proceedings and access to court documents for Hertz and Donlen can be found at https://restructuring.primeclerk.com/hertz/.