Hertz Global Holdings has entered into a stock and asset purchase agreement to sell substantially all of the assets of Donlen, its wholly-owned fleet management subsidiary, to Athene Holding, a leading financial services company.
Donlen is being sold for an anticipated cash payment of $825 million subject to adjustments for fleet equity, working capital, and assumed debt, according to the companies. Hertz anticipates that these adjustments will result in a purchase price at closing of at least $875 million. Athene, through its subsidiaries, is a retirement services company that issues, reinsures, and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs.
"The agreement to sell our Donlen business is another significant accomplishment for Hertz during our financial restructuring, following the $1.65 billion debtor-in-possession financing and $4 billion fleet financing recently approved by the Bankruptcy Court,” Hertz President and CEO Paul Stone said. “As we continue to work to position Hertz and our business for the future, we believe this transaction provides significant additional flexibility to help us achieve our strategic and financial objectives. At the same time, customers will continue to be able to benefit from Donlen's commitment to excellence in fleet management solutions and service."
The agreement with Athene was reached following an initial marketing process. If approved by the Bankruptcy Court at a hearing anticipated for Dec.16, 2020, the agreement with Athene will serve as the "stalking horse bid" in a court-supervised sales process, and the agreement will establish a minimum sale price for Donlen.
"We are pleased with this opportunity to position Donlen's business for continued long-term success and appreciate Athene's commitment to continuing our tradition of high-quality service, customer satisfaction, and award-winning fleet management, working with our talented employees,” said Donlen President Tom Callahan. “Our fleet customers remain our top priority and we look forward to continuing to be a trusted partner providing high levels of customer satisfaction, impactful technology, and fleet solutions."
Hertz expects to conduct a competitive auction process pursuant to Bidding Procedures that will be subject to approval by the Bankruptcy Court to ensure Hertz receives the highest and best offer for the Donlen business, according to the company.
“In support of the business, strengthening the balance sheet and its significant growth opportunity, we are making an upfront investment of approximately $1 billion, and we are prepared to provide incremental capital that would support approximately $2 billion of additional growth in the fleet. We plan to support Donlen with resources to invest in technology and grow their team, which will enable them to continue offering best-in-class service to their long-standing customer base,” said Athene Chairman and CEO Jim Belardi.
Earlier this year, Hertz Global Holdings on May 22, 2020, announced that the company and certain U.S. and Canadian subsidiaries filed for Chapter 11 bankruptcy.
In 2011, Hertz purchased privately-held Donlen for $250 million, and also assumed approximately $680 million of Donlen's outstanding fleet debt.