How much incremental value creation will the buyout plan achieve?
Before buyout:
Hertz has $1B cash,
$10B of fleet assets,
$9B of debt ($8,454M existing debt + $600M ABS),
Cost of debt is 9%
After buyout:
Buyout values the entire company at $15, of which $12.5B will be debt and $2.3B equity money
The New company is structured into two legally separate entities: OpCo and FleetCo
OpCo will have $5.3B of debt at the interest cost of about 9%
FleetCo will have $7.2B of debt at the interest cost of L+70, which you can assume to be about 6%
Throughout you can use the followings as default assumptions: unlevered beta=1.5, risk-free rate=5%, market risk premium=5%