Hertz (OTC:HTZG.Q) stock slid 10.5% in morning trading after it began working with debt restructuring advisors to avoid a bankruptcy filing as it combats the loss of demand for rental vehicles amid the coronavirus pandemic.
Earlier this week the car rental agency announced it was furloughing 10,000 employees in North America.
Hertz, which also owns the Dollar, Thrifty, and Firefly car rental brands, is heavily reliant on the travel industry, with each of its brands maintaining counters at airports. Airport concessions accounted for 65% of Hertz's revenue in 2019.
As the COVID-19 outbreak has decimated air travel, the airlines themselves are in line to receive bailouts from the federal government. Hertz and Avis asked Congress to include the industry in any stimulus package passed, but car rental agencies were excluded.
Ratings agency Fitch Ratings has since revised its outlook on the industry, and now expects Chapter 7 bankruptcy filings followed by fleet liquidations.
Bloomberg reports Hertz has hired restructuring specialist Moelis & Co. to potentially work with the company's debt holders to allow it to issue more debt. No restructuring is imminent, though, and Hertz is seemingly not in danger of going under at the moment, as it had $1 billion in liquidity at the end of 2019 with no debt maturities until 2021.
Shares of Hertz have fallen over 80% since the middle of February.