Steve Cohen's family venture, Cohen Private Ventures, is leading an $80 million investment in Hertz subsidiary Oro Mobility Holdings. The division manages rideshare systems and autonomous vehicle fleets. This move comes as Hertz grapples with persistent challenges under private equity owners Knighthead and Certares, who took over during the 2020 bankruptcy.
The company continues to face high vehicle maintenance costs and volatile used car prices, which impact fleet accounting value. With $6 billion in borrowings towering over expected $220 million EBITDA, Hertz's leverage remains unsustainable. Cohen's deal values Oro at around $500 million and aims to avoid another Chapter 11 bankruptcy.
A portion of the cash will retire Hertz debt at a discount. However, the tactic of shuffling a promising asset out of reach of existing lenders is edgy and may result in lawsuits from aggrieved creditors. Hertz's equity value has fallen to around $700 million, less than a third of its April size.
Unlike Bill Ackman, who bet on a full business revival, Cohen is taking a punt only on a part of the business, likely with protections and seniority that Ackman's stock lacked. Defensive driving is the best tactic for Hertz after its many collisions.
Source: Financial Times Companies · Summarized by HeadlinesBriefing