June 15, 2020 / 12:24 PM / 2 months ago

Bankrupt Hertz to sell up to $500 million in new shares

FILE PHOTO: A passenger wearing a protective mask passes in front of a counter of the car rental company Hertz at the almost empty Benito Juarez international airport, as the spread of the coronavirus disease (COVID-19) continues in Mexico City, Mexico, June 11, 2020. REUTERS/Edgard Garrido

(Reuters) - Hertz Global Holdings Inc will sell up to $500 million in new shares, the car rental firm said on Monday, as it takes advantage of a strong rally in its stock since it filed for bankruptcy last month.

Hertz said its shares would be eventually "worthless", but the stock sale, part of the $1 billion that the company announced last week, could benefit creditors seeking to recover more of their claims during the bankruptcy process. (bit.ly/3fwkQCt)

The company’s stock closed at 55 cents on May 26, since then it has risen more than five-fold in value. The shares, which were down 23.3% at $2.17 in premarket trading on Monday, are set for their best month on record.

Investors, many of them amateur traders who use apps including Robinhood, are betting on how high they can push the stock before it collapses.

Record savings, stimulus checks, low interest rates and even lockdown boredom amid the coronavirus outbreak have all been cited by market pundits as possible explanations for the extraordinary rise in the company’s share price.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Arun Koyyur

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