Hertz shareholders face Sept 22 deadline in securities fraud suit

Hertz Global Holdings faces a Sept 22 lead plaintiff deadline in a securities fraud class action covering shares bought between May 7 and June 23.

Wolf Haldenstein Adler Freeman & Herz LLP, which filed the suit in the U.S. District Court for the Middle District of Florida, said investors who purchased Hertz shares during the class period and suffered losses may be eligible to participate in the case. The complaint is captioned Schweitzer v. Hertz Global Holdings, Inc., No. 26-cv-02242.

The class period begins May 7, when Hertz released first-quarter results touting its "Strongest Revenue Growth in Three Years" and assured investors that cash, liquidity facilities, and refinancing options would fund operations for the next twelve months. The complaint alleges those statements were materially misleading because Hertz's liquidity was deteriorating faster than represented, and softness in the used-car market — which management had characterized as "isolated to the quarter" and "transitory" — had recurred and was depressing net depreciation per unit and Adjusted Corporate EBITDA.

On June 24, just weeks after those assurances, Hertz announced a $300 million offering of Exchangeable Senior First-Lien Secured PIK Notes due 2030, alongside a share-lending deal of more than 37 million shares. The offering was later upsized to $350 million (up to $400 million) at a 6.75 percent coupon, with an exchange price of approximately $3.58 per share and borrowed shares sold to the public at $2.70. Hertz simultaneously cut second-quarter Adjusted Corporate EBITDA guidance to $50 million to $80 million, citing "unexpected softness in the used car market." Shares plunged more than 40 percent to close at $3.00 on June 24.

The stock has continued to slide since. Jefferies cut its price target from $6 to $2, while Barclays lowered its target from $3 to $1 with an Underweight rating. S&P Dow Jones removed Hertz from the S&P SmallCap 600 on Aug 5. Shares traded near $2.16 on Aug 10, down 4.63 percent. The company carries roughly $21.1 billion in long-term debt against negative equity, with revenue near $8.5 billion and a gross margin of 41.6 percent. Hertz generated $381 million in operating cash flow and $353 million in free cash flow in the second quarter, though a current ratio of 1.7 and quick ratio of 0.8 point to tight liquidity.

The lawsuit adds to a cascade of pressures on Hertz — dilutive financing, analyst downgrades, and index removal — as the company's balance sheet remains heavily leveraged. Multiple firms, including Kessler Topaz Meltzer & Check and Kaplan Fox & Kilsheimer, have also issued notices to affected investors. The Sept 22 lead plaintiff deadline is the next key date for shareholders seeking to direct the litigation.

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