Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Eniola Odetunde/Axios

Car rental giant Hertz filed for Chapter 11 bankruptcy on Friday, ostensibly felled by a pandemic that dramatically lowered demand at its airport counters.

Under the hood: Hertz is a Frankenstein of financial engineering, beginning with its leveraged buyout in 2005 and continuing long after its private equity owners cashed out.

History: Clayton Dubilier & Rice led a $14.8 billion purchase of Hertz from Ford Motor Co. in late 2005. The deal included just $2.3 billion of equity, split equally with the Carlyle Group and Merrill Lynch's private equity unit, and leveraged $6.9 billion of financing against its fleet.

  • Six months later it completed a $1 billion dividend recap, meaning the private equity firms de-risked while the company re-levered.
  • Hertz went public less than a year after the buyout. Leading into the IPO, it had a debt-to-asset radio of nearly 95% and very little cash on hand.
  • In 2012 the company overpaid to buy smaller rivals Dollar and Thrifty, and in 2013 the private equity firms completely exited.
  • Following an accounting scandal that dated back to 2011, activist investor Carl Icahn began to invest. At the time of bankruptcy, he was the company's largest shareholder with nearly a 39% stake.
  • In 2016, Hertz spun off its equipment rental company into a separate, stand-alone public company.

What to know: Hertz made money by renting cars, but it was more in the car-leasing business. Or, more specifically, creating special purpose vehicles that would issue debt to buy cars, then leasing those cars and renting them out.

  • All the while it would pay coupons on the asset-backed securities, hoping to turn profits via the rentals combined with vehicle resale.
  • Plus, resale prices have fallen sharply during the pandemic, and will come under further pressure if Hertz creditors force partial fleet liquidation.

Here's how the FT's Sujeet Indap summarized things:

"Hertz is basically a bank that rents cars. This structure reduces the overall cost of capital but when the music stops, look out."

The bottom line: Hertz elevated the Wall Street shell game that originally helped finance its 2005 takeover, without apparently noticing that the original operators had left town.

Go deeper

Mike Allen, author of AM
44 mins ago - Politics & Policy

Liz Cheney's plan to take on Trump

Cheney speaking to reporters after being removed as GOP conference chair yesterday. Photo: Kevin Dietsch/Getty Images

Rep. Liz Cheney (R-Wyo.) plans to make her purge the beginning of a new movement, with campaign travel, fundraising and speeches to challenge Donald Trump for ideological dominance of the GOP.

Driving the news: Sources in Cheney's camp tell me her message will be the importance of the truth, the need to move past Trump, and a push to articulate conservative policy and substance to combat Democrats.

Exclusive: Stephen and Ayesha Curry join One Million Black Women initiative

Stephen Curry and Ayesha Curry. Photo by Steve Jennings/Getty Images

Stephen and Ayesha Curry are joining the advisory council for Goldman Sachs' One Million Black Women initiative, Axios is first to report.

Why it matters: The initiative has committed to invest more than $10 billion in Black women over the next 10 years. It comes as banks and large companies are increasingly putting money behind rhetoric about advancing racial equity.

2 hours ago - Health

Axios Harris Poll 100: Pfizer, Moderna reputations soar post-vaccine

Data: Harris Poll; Chart: Danielle Alberti/Axios

America's affections have shifted away from the companies that helped us manage pandemic life and toward the vaccine manufacturers that are helping to end it.

Driving the news: Moderna and Pfizer shot up the ranks this year in the Axios/Harris 100, our annual survey of corporate reputations. Moderna is Americans' third-favorite company this year, and Pfizer came in at seventh — up from No. 61 a year ago.