Hertz went bankrupt in 2020 and came out in 2021. Now it wants to be the pit crew for cars with no one behind the wheel. The press release says Hertz kept majority economic ownership. The 8-K says it gave up the deciding vote.
On Oct. 16, Hertz signed a joint-venture deal to sell a slice of Oro Mobility, its fleet-management offshoot. The buyers are a group that includes Cohen Private Ventures, the family office of Point72 founder Steven A. Cohen, plus funds tied to Certares and Knighthead. According to the Form 8-K, the group paid about $80.89 million. That bought units worth roughly 15.86% of Oro’s economics and 50% of its voting rights. Oro now answers to a six-member board split three and three.
So the investors get about a sixth of the profits and half the votes. On a napkin, that values Oro at around $510 million before dilution from a management incentive plan. Hertz keeps “majority economic ownership,” per its press release. It no longer has the deciding vote.
Where the $81 million went
The filing says the investors bought their units from a Hertz entity. Oro did not issue new ones. Before the sale, Hertz moved Oro’s business assets into the new company along with about $60.03 million in cash. Most of Oro’s starting cash is Hertz’s own money. The investors’ check goes mostly to Hertz.
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Hertz also cut a second deal with two of the same investors. Hertz agreed to repurchase about $51.1 million of its 8% second-lien paid-in-kind notes due 2029 from Certares and Knighthead affiliates. It is paying roughly $20.86 million, a 60% discount to face value. Those two firms are old acquaintances. They were plan sponsors of Hertz’s 2021 Chapter 11 exit. Buying back expensive PIK debt at 40 cents on the dollar helps Hertz’s balance sheet. It also puts the same investors on both sides of related trades. That is why the 8-K notes that Hertz’s audit committee and other disinterested directors approved everything.
What Oro actually does
Oro runs about 45,000 vehicles across three businesses: rideshare rentals, fleets driven by Oro’s own employees, and autonomous-vehicle fleet management. In April’s Uber announcement, the companies said Oro’s employee-driver service started as a pilot in Atlanta. It then expanded to Los Angeles and San Francisco, with Northern New Jersey next. The robotaxi work supports Uber’s program pairing Lucid vehicles with Nuro’s self-driving system. Oro handles charging, maintenance, repairs, cleaning and depot staffing in the Bay Area, with service expected to start later this year.
That work is harder than renting compacts at the airport. A robotaxi earns money only while it’s moving. Its uptime depends on routine tasks: keeping sensor housings clean, managing charging so cars aren’t plugged in during rush hour, and turning repairs around fast. A bumper or glass replacement that’s simple on a normal car can affect sensor calibration on an AV. A day in the body shop is a day the car earns nothing.
Hertz as landlord
The 8-K also shows how closely Oro remains tied to its parent:
- Fleet lease: Oro leases its fleet from Hertz for about $13.7 million a month, or more than $164 million a year, over an average term of roughly 4.5 years.
- Financing: Many of those vehicles are financed through Hertz’s existing HVF III securitization. Oro may eventually set up its own asset-backed facility.
- Services: Hertz will provide corporate, fleet and technology services. IT and security support move to Oro within 12 months.
- Branding: Oro pays Hertz a 0.5% royalty on new rental customer revenue for co-branded marks.
Oro can use the Hertz name royalty-free until the later of 12 months or the date it obtains all required government licenses and permits. Translation: Oro doesn’t yet have every permit it needs to run without Hertz.
What it means for you
If you drive for Uber in a Hertz rental, read your next contract closely. The party you sign with is the one you’ll deal with on damage claims and coverage questions. If you shop for ex-fleet cars in a few years, ask whether a car spent its life in a rideshare pool. Those miles add up differently than vacation rentals.
Oro CEO Doria Holbrook’s pitch: “The future of mobility will be powered by professionally managed fleets.” If she’s right, those fleets need a landlord, a financing pipeline, a back office and a brand. Hertz is all four. It just isn’t the tiebreaker anymore. If you were Hertz, which would you have held onto: the profits or the vote?
Top photo: Luca Merz on Unsplash.