Hertz Finally Moving Forward With Its Equipment Spinoff – Targeting Q2 2016 Completion

Hertz (HTZ) first announced the idea of spinning off its rental equipment business back in March of 2014 after facing severe activist pressure. The plan was to have the equipment company pay a big dividend which would fund a large buyback at the parent. A few months later, the company even managed to settle its fight with Carl Icahn by giving him a bunch of board seats.  Unfortunately, the company had some accounting ‘issues’ leading it to restate years of financials. This of course grounded the spinoff process to a halt and nothing was heard on that front for well over a year.

Cut to 2016 – the company has a new CEO, John Tague, and a clean set of books, which means, among other things, that it can move forward with the spinoff. As part of that process, late last year the company filed HERC’s initial Form 10 with the SEC, an important milestone.

The leadership team that has been announced so far includes:

  • Larry Silber, president and chief executive officer, whose background includes 30 years with Ingersoll Rand, where he led major business groups including utility equipment, rental and remarketing and the equipment and services businesses. Most recently, Silber was executive advisor at Court Square Capital Partners, LLP.
  • Barbara Brasier, who joined the business in November 2015 as chief financial officer. Before joining the equipment rental business, Brasier was senior vice president, tax and treasury for Mondelez International, Inc.
  • Maryann Waryjas, who also joined the business in November 2015 as general counsel. Waryjas previously was senior vice president, chief legal officer and corporate secretary for Great Lakes Dredge & Dock Corporation, one of the largest providers of dredging services in the United States. She has more than 30 years of corporate governance, securities, and mergers and acquisitions experience, including as a partner in major national law firms.
  • Bruce Dressel, who joined the business as chief operating officer in June 2015. Dressel brings more than 30 years in leadership and senior management roles in the equipment rental industry, including time as president and CEO of Sunbelt Rentals, where the company grew from 24 to 195 locations during his tenure there.
  • Rich Marani, who joined the business in June 2015 as chief technology officer. Marani has more than 30 years IT experience in industrial products, construction equipment, aerospace and information technology businesses. Recently, Marani served in a senior IT leadership role with Ingersoll Rand, responsible for global IT strategy for a $3 billion sector of the Ingersoll portfolio.
  • Chris Cunningham, who joined the business in September 2014 as chief human resources officer. Cunningham has significant, senior-level experience in the initial public offering process, talent acquisition, board relations, performance management, governance, and international and field operations. He joined the business from DFC Global Corporation.

Prior to the accounting mishap, Brian Macdonald had been slated to lead the new company, but he abruptly resigned earlier this year. Perhaps the taste of bigger things, having served as interim CEO of all of Hertz, made this unappealing? Or something else?

I haven’t had a chance to go through the entire Form 10 yet, but it looks like the car company will actually be the one technically spun off albeit not for accounting purposes. While no official date has been set, according to the press release, the spinoff will be completed during Q2 of 2016. We will keep you updated.

Disclosure: Author holds no position in any stock mentioned.