Weekend Edition: Hertz Finally Sets Its IPO Terms

Hertz, one of the largest auto and equipment rental companies, has finally set its IPO terms. We have known this deal was coming, it just boiled down to WHEN and WHAT terms. Now we know the WHAT with some 88.235 million shares being set at a range of $16 to $18 per share. The offering looks to be some $1.41 Billion on the low-end, and almost $1.6 Billion raised if the deal prices at the high-end. The original filing was given only a $1 Billion nominal amount, but it isn't clear if that was just for filing calculations or if there was a bump on preliminary demand. The total offering will be $1.8 Billion if all over-allotment shares are taken. The WHEN should be in the coming weeks.Hertz is going to trade (this time) under the ticker "HTZ" on the NYSE. The lead underwriters are Goldman Sachs, Merrill Lynch, Deutsche Bank, J.P.Morgan and Lehman Brothers; and co-managers are set as Morgan Stanley, Credit Suisse, UBS, and Wachovia.Hertz has a long and somewhat humorous history of being public and being a controlled company. It was bought out from Ford Motor (F) in December of 2005 for around $15 billion by Clayton, Dubilier & Rice: Carlyle Group and Merrill Lynch Global Private Equity; although Ford had filed for it to come public before that in June of 2005. Ford spent a stent as a public company under Ford for a while, but it March of 2001 Ford re-acquired the 18.5% of the stock that was outstanding. It had gone public under the HRZ ticker back in 1997. Before that it was part of the Park Ridge Corporation (venture of Ford and ex-management), and Ford acquired it in 1994. Back in the 1960's it became part of the RCA Corporation, and was its own listed company in the 1950's after being under GMC. It was formed as an amalgamation of operations in the early 1920's and General Motors bought it in 1926.In case you didn't notice, Hertz has been a bride passed around the neighborhood. It looks like the parent couldn't control the daughter and sold her off, then she was lost in a poker match, then sold off again, then reacquired after a makeover, then a collector wanted her, and now she's going to be made available to the public again.Here is what we posted back in July on the upcoming IPO.Naturally the private equity guys are going to get their cut before the IPO. They are going to take out roughly a $426.8 million special dividend before the IPO. As of June 30, 2006 the company had $13.94 Billion listed as debt from leases and borrowed funds. After the IPO including over-allotments the current holders will still hold 67.5% of the common stock. The company posted first half of 2006 results as $3.827 Billion revenues and a reported net loss of $33.3 million. Before interest and depreciation, Hertz has an implied EBITDA income of actually over $1.2 Billion. You can find more data in the SEC Filing with the hitorical data.She's been around before, but it looks like the street still has a twinkle in its eye for her.Jon C. Ogg