Bankrupt Hertz terminates controversial stock sale

Hertz shares tumbled about 10{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} Thursday after the company said it plans to terminate a controversial stock sale.

Earlier in the day, trading in Hertz shares were halted, awaiting the announcement. 

This is the second consecutive day Hertz stock has been forced to halt trading. Shares stopped trading for several hours Wednesday ahead of the company saying it was suspending a plan to sell up to $500 million in shares after the Securities and Exchange Commission voiced concern about the deal and launched a review. 

Hertz wanted to use the sale to leverage interest in its stock, which had seen volatile trading in the wake of its bankruptcy filing. The company felt it was a better option than obtaining so-called debtor-in-possession financing. DIP financing is a loan that the company would need to pay back. However, if it were to sell stock, the funds it raises would not need to be reimbursed. 

Hertz filed for bankruptcy May 22 as demand for car rentals dried up as travelers have stayed home during the coronavirus pandemic. The stock hit a low of 40 cents intraday on May 26. But in the days that followed, the shares began to recover and eventually surged to more than $6 per share last Monday.

Following the increase, Hertz asked the bankruptcy court Thursday to allow it to sell up to $1 billion in shares. The request was approved by the court Friday. Separately, it also appealed to the New York Stock Exchange not to delist its stock.