(Bloomberg) — Hertz Global Holdings Inc. suspended plans to raise cash by selling new shares that the bankrupt car renter described as potentially “worthless” after its proposal failed to pass muster with regulators.The company halted sales while it deals with issues brought up by staff members at the U.S. Securities and Exchange Commission, according to a filing. The stock, whose trading had been halted earlier in the day, ended the regular trading session up 5 cents at $2, while ilts bonds tumbled.The action puts the brakes at least temporarily on Hertz’s so-called ATM Program, which sought to raise as much as $500 million for the cash-hungry company. The extra scrutiny comes amid a mania, especially among individual investors, for shares of bankrupt and near-bankrupt companies. The enthusiasm has baffled professionals because common shares typically get canceled at the end of the court process, leaving equity owners empty-handed.“After discussions with the staff, sales under the ATM Program were promptly suspended pending further understanding of the nature and timing of the staff’s review,” Hertz said in its filing. It’s not currently offering shares and its advisers “have been in regular contact with the commission.” A Hertz representative declined to comment.The company warned at least half a dozen times in its offering that would-be buyers could find themselves wiped out. Hertz had said stockholders wouldn’t get anything from its bankruptcy plan unless those with more senior claims, including bondholders, are paid in full. The most junior bonds alone have seen more than $2 billion of value evaporate, enough to erase the shares several times over.“We have let the company know that we have comments on their disclosure,” SEC Chairman Jay Clayton said in a CNBC interview Wednesday. “In most cases when you let a company know that the SEC has comments on their disclosure, they do not go forward until those comments are resolved.”Bonds SlumpHertz’s most actively traded debt, $800 million of 5.5% notes due 2024, slid 4.75 cents on the dollar in New York to trade at 38 cents. The notes were among the biggest decliners in the high-yield market Wednesday.Hertz asked for the sale after a nearly tenfold increase in its stock from 56 cents on May 26 to $5.53 last week. In its earliest version, the plan called for raising up to $1 billion, a sum that was scaled back as the price of the shares receded. The reasoning was that a share sale would raise money at less cost and with fewer restrictions than a traditional bankruptcy loan.The idea won approval from a bankruptcy judge last week during a hearing in which an SEC attorney said the commission would be reviewing the proposal. Hertz said it wanted to begin selling shares by Monday, June 15 to avoid missing the opportunity presented by the unusual rally in its stock.(Updates with share and bond prices, passage from SEC filing, starting in the second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
