It turns out that selling worthless stock was not such a good idea after all.
Following a lot of criticism and an intervention by the Securities and Exchange Commission (SEC), Hertz Global Holdings Inc. (NYSE:HTZ) has suspended its plans to raise cash by selling new shares that the bankrupt car rental company described in its own documents as "potentially worthless."
Hertz halted plans to sell additional shares "pending further understanding of the nature and timing" of the regulatory review, according to a filing from the company. The reversal followed inquiries and an intervention from the SEC about the plan advanced by Hertz, which sought to raise as much as $500 million U.S through the share sale.
The company warned at least half a dozen times in its offering that would-be buyers of Hertz shares could find themselves wiped out financially. Hertz had said that shareholders 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 U.S. of value evaporate, enough to erase the shares several times over.
