Hertz Plans IPO as Parent Ford Seeks to Raise Cash

Ford Motor Co.’s Hertz rental car unit plans an initial public offering of stock as the automaker moves ahead with efforts announced in April to raise money through options including selling the business.

Hertz disclosed the plan in a filing Monday with the Securities and Exchange Commission. The unit said it would use proceeds to repay $1.19 billion in promissory notes issued to Ford on June 10.

Hertz didn’t say when the sale might occur, how many shares it plans to sell or at what price.

The filing “gives us an option to do an IPO,” Ford spokesman Glenn Ray said. The company is also examining the possibility of selling all of Hertz to a third party and may spin off the unit to shareholders as part of an IPO, he said.

“Ford wants to focus on the manufacturing business,” said Dennis Virag, president of Automotive Consulting Group Inc. “The competitive pressures are such you need to refresh your product more often. You need to invest heavily on new products on a regular basis.”

The rental car unit said in the filing that the initial offering would be as much as $100 million, a figure it said was only for the purpose of calculating the registration fee. Hertz said it planned to list the shares on the New York Stock Exchange under the symbol HRZ.

Hertz’s net income in 2004 rose to $365.5 million from $158.6 million in 2003 as revenue increased to $6.68 billion in 2004 from $5.93 billion, according to the unit’s filing.

Hertz said it believed that it was “the largest worldwide general use car rental brand.” Closely held Enterprise Rent-A-Car said in April that its 2004 revenue was $7.4 billion, making it larger on that basis than Hertz.

Ford shares rose 19 cents to $10.52.