(Bloomberg) -- Hertz Global Holdings Inc. has received interest from several potential buyers for its Donlen fleet business and is considering a sale if it can get at least $1 billion, according to people familiar with the matter.
Hertz, which filed for Chapter 11 bankruptcy protection in May, sees Donlen as nonessential to its core rental business and is willing to consider selling it to satisfy some debt obligations and enable the company to more easily raise debtor-in-possession financing, one of the people said, asking not to be named because the talks are private.
The rental company has been jettisoning some of the vehicles in its fleet to pay creditors and to downsize its operations for a shrunken travel business. Hertz slipped into bankruptcy after the Covid-19 pandemic decimated air travel and car rental volumes.
Donlen's suitors are chiefly private equity funds, the people said. Their ability to raise capital could help Donlen, which pays higher interest rates because its parent is bankrupt.
Hertz hasn't made a final decision on pursing a sale and its plans could still change, the people said.
A representative for Hertz didn't immediately respond to a request for comment.
Hertz bought Bannockburn, Illinois-based Donlen for $947 million in 2011 to obtain its corporate fleet rental business. The unit has held volumes better than Hertz's core travel rental business but there aren't many synergies between the two, the people said.
Donlen made about $100 million in earnings before interest, tax, depreciation and amortization last year, one of the people said.
Since filing for bankruptcy, Hertz has avoided raising expensive financing by selling vehicles into a rapidly recovering used-car market. That's helped satisfy holders of its asset-backed securities. Hertz has also cut deals with those creditors in court to keep using the remaining cars as the rental business slowly recovers.
Before filing for bankruptcy, former Hertz Chief Executive Officer Kathy Marinello had considered selling Donlen to avoid court protection. But the board decided that it was too difficult to predict the recovery of rental volumes and filed. Marinello was replaced on May 18 by Paul Stone, who had been chief retail operations officer.
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