Hertz Puts Sale Of $500M In 'Worthless' Stock On Hold, Awaits SEC Review

Hertz Global Holdings Inc. HTZ has put on hold its $500 million share offering as it awaits a review by the Securities and Exchange Commission.

What Happened

In a filing with the SEC, Hertz revealed that on Monday afternoon, it was informed by the Commission’s Division of Corporation Finance it intended to carry out a review of the prospectus supplement.

Hertz decided to suspend the sale of its common stock pending “further understanding of the nature and timing of the [staff's] review.”

The car rental firm says it is in regular contact with the SEC and is not currently offering any shares through an agent.

SEC Chairman, Jay Clayton, said that the commission had comments on Hertz’s disclosure Wednesday. 

He told CNBC’s “Squawk on the Street” program, “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.”

Why It Matters

Hertz declared bankruptcy on May 22 and planned to use the proceeds of the sale of its shares to raise up to $1 billion. A stock rally had motivated the company to act quickly on the sale.

It had sought and received permission from a bankruptcy court to sell its potentially worthless shares on Friday.

The New York Stock Exchange begun the process of delisting Hertz.

On Tuesday, former SEC Chairman Harvey Pitt called on the SEC to ensure that Hertz and similar companies become “far more aggressive” in their disclosure.

Pitt also cautioned that investment banks working with Hertz “have liability” and need to do more.

Hertz Price Action

Hertz shares traded 4% lower at $1.92 in the after-hours session on Wednesday. The shares had closed the regular session 2.56% higher at $2.