It’s official: Hertz, the bankrupt car-rental company, has canceled its plan to sell $500 million in new stock.
The offering seemed like a good idea only a week ago. Some investors seemed keen to pour money into Hertz’s stock even after the company’s bankruptcy filing last month, so why not offer them more shares to buy? Hertz submitted a plan to a bankruptcy judge, who approved it on Friday. On Monday morning, the company said it was moving forward. But then it hit a snag.
The Securities and Exchange Commission told Hertz that it was reviewing the plan. “When you let a company know that the S.E.C. has comments on their disclosure, they do not go forward until those comments are resolved,” the commission’s chairman, Jay Clayton, told CNBC on Wednesday.
Trading in the company’s shares was halted midday on Wednesday, and Hertz said in a filing that it had suspended the sale “pending further understanding of the nature and timing” of the S.E.C.’s review. On Thursday afternoon, Hertz said its board had decided that it was “in the best interests of the company” to scrap the sale altogether.
That decision might end up protecting the very investors who would have bought the shares. After all, when Hertz announced the offering this week, it acknowledged that the new shares could become “worthless” — a common outcome in bankruptcies.
AMC Theaters, the nation’s largest theater operator, gave more details on its previously announced plan to reopen its chain in the coming weeks.
About 450 AMC cineplexes in the United States will relight their marquees on July 15, with auditorium capacity capped at 30 percent (or less, where mandated by local health officials). Another 150 locations will reopen by July 24 to coincide with the release of Disney’s live-action “Mulan,” the first big-budget movie scheduled to come out of Hollywood since March.
AMC said that it expected to increase auditorium capacity to 50 percent “around Labor Day” and that capacity limits was likely to be phased out on Thanksgiving or thereabouts.
The company emphasized that it would reopen with an array of safety protocols developed with input from Harvard University’s T.H. Chan School of Public Health and the Clorox Company.
Big Tech is rushing out new work force health-vetting and tracking tools.
Verily Life Sciences, a sister company of Google, is introducing a health screening and analytics service for businesses trying to safely reopen during the pandemic.
The service, announced on Thursday, will offer Covid-19 diagnostic testing for employees and clear them to return to the workplace based on their test results and other health data. It will also make recommendations to employers on how often workers should be retested, based on the prevalence of the virus in their work force and the local community.
With its new service, Verily is joining numerous tech giants and start-ups rushing to help business across the United States as they grapple with how to safely reopen the workplace.
Microsoft and the large insurer UnitedHealth Group, for instance, recently collaborated on a free symptom-checking app that helps pinpoint workers at obvious risk for the virus and direct them to testing resources. On Tuesday, Fitbit introduced a program that includes a daily symptom-checking app for employees and a work force health-monitoring dashboard for employers.
There is such a glut of new coronavirus risk-reduction products that it’s a challenge for many employers to assess them all.
“A big market rose up overnight,” said Jeff Becker, a senior analyst for digital business strategy at Forrester, a market research firm, who recently surveyed two dozen vendors offering coronavirus solutions for employers. “But it’s a fractured ecosystem, much like traditional health care.”
DoorDash, the largest food delivery company in the United States, said on Thursday that it had raised another $400 million in a new round of funding, valuing the company at $16 billion.
The cash infusion comes after months of growing demand for DoorDash’s services while restaurants are closed and people are staying home during the coronavirus pandemic.
The company was expected to go public this year after filing registration documents in February. But initial public offerings slowed as the markets became volatile, and DoorDash has focused on responding to the flood of demand.
The company faces challenges as it prepares to go public. It is not profitable and food delivery remains competitive. Its largest rivals, Grubhub and Uber Eats, held merger discussions, with Grubhub eventually agreeing to sell to Just Eat Takeaway, a European food delivery service, for $7.3 billion in June.
Restaurants are struggling to make ends meet on delivery apps, which charge fees for their services and sometimes list restaurants that have not signed up. In April, DoorDash cut its primary fees for independent restaurants during the pandemic, which it said cost it around $120 million.
The company also faces pushback from regulators and workers. California has required “on-demand” tech companies to classify their armies of gig workers as employees. This week, San Francisco’s district attorney sued DoorDash for unfair business practices, seeking an injunction requiring the company to comply with California’s worker classification law.
Fidelity and Durable Capital Partners led the $400 million round. DoorDash, based in San Francisco, has raised $2.3 billion since it was founded in 2013.
Unemployment claims top one million for the 13th straight week.
Businesses are reopening, but the layoffs won’t quit.
Another 1.5 million people applied for state unemployment benefits last week, the Labor Department said Thursday.
It was the 13th straight week that state filings topped one million. Until the coronavirus crisis, the most new claims in a single week had been 695,000, in 1982.
Claims for Pandemic Unemployment Assistance, a federal program for self-employed workers, independent contractors and others ineligible for standard benefits, added 760,000 to the total.
“It’s a sustained hemorrhaging of jobs unlike anything we’ve seen,” said Heidi Shierholz, director of policy at the Economic Policy Institute, a progressive think tank.
Economists said recent layoffs, though smaller than the wave in March and early April, suggested that the crisis was reaching deeper into the economy.
Hilton Worldwide, the hotel operator, said this week that it was eliminating 2,100 corporate jobs globally and would extend previous furloughs and cuts in hours and wages for 90 days. AT&T disclosed plans to shed 3,400 technician and clerical jobs nationwide and permanently close more than 250 stores, according to one of its unions. The gym chain 24 Hour Fitness said it was filing for bankruptcy protection and would permanently close more than 100 locations.
More than 40 percent of black business owners reported they were not working in April, when businesses were feeling the worst of the pandemic’s economic consequences. Only 17 percent of white small-business owners said the same, according to an analysis of government data by Robert Fairlie of the University of California, Santa Cruz.
Many small businesses are struggling during the pandemic because they lack easy access to loans and cannot easily move their businesses online. Black-owned businesses tend to have fewer employees than other small businesses. They are also more likely to be in industries like restaurants or retail that lockdowns have hit especially hard, said Ken Harris, president of the National Business League, an organization founded by Booker T. Washington in 1900.
“Most lack the capacity, scale and technical assistance needed to survive a pandemic,” Mr. Harris said.
Black-owned businesses also appear to be benefiting less from federal stimulus programs. Only 12 percent of black and Hispanic business owners polled from April 30 to May 12 received the funding they had requested. About one quarter received some funding. By contrast, half of all small businesses reported receiving from a single part of the stimulus packages — the Paycheck Protection Program — according to a census survey.
“Black businesses often don’t have a traditional banking partner,” Mr. Harris said. Without such a partner, many had trouble applying for assistance.
With capacity limited and demand uncertain, small-business owners say it’s hard to know whether to spend the money to reopen now or to wait.
With no revenue for months, small businesses must find ways to pay for the new sanitation regimens, thermometers, plexiglass, masks and other items necessary to open, without knowing whether customers will return.
“None of the relief packages have included specific funding for safety retrofitting, purchasing of safety equipment or even helping business getting a handle on uniform P.P.E. for employees and customers,” said Amanda Ballantyne, executive director of the Main Street Alliance, an advocacy group for small business.
Some businesses are taking a slow approach. At first, Chris Lynch and Michael Samer weren’t sure what to do about their ocean adventure tours business, Everyday California, when they got the go-ahead in late April.
Mr. Lynch and Mr. Samer decided to reopen with curbside kayak and surf rentals only, keeping their retail shop and tour business closed. Then, as they felt more comfortable, they reintroduced tours at a 50 percent capacity with everyone wearing a mask. They also invested in their neglected online shop.
The bet paid off: They increased what had been a small number of online merchandise sales by 750 percent in May, allowing them to bring back about 20 employees to help with shipping and marketing.
Wall Street faced another day of unsteady trading on Thursday, with stocks drifting between negative and positive territory as investors considered new data on unemployment claims and the latest reports on fresh coronavirus outbreaks.
In the end, the S&P 500 ended essentially unchanged.
Markets have become somewhat directionless as concerns about a rise in new coronavirus cases around the world have collided with expectations for a quick economic recovery in recent days. It’s a consolidation that many Wall Street analysts have described as long overdue, after the S&P 500 ripped higher with a string of gains from late March to early June.
But it also reflects growing uncertainty about the economic picture going forward.
Another 1.5 million U.S. workers applied for state unemployment benefits last week, a report released Thursday by the Labor Department showed. Not all the unemployment claims necessarily reflect new layoffs. Some states are still working through backlogs of claims filed earlier in the crisis; in other cases, people filing under multiple programs may be counted twice.
But three months into the crisis, there is little doubt that layoffs remain elevated. Economists warn that job losses could worsen if government support that has helped prop up the economy is allowed to lapse too soon.
Many people are in the position of needing help they never imagined would be necessary. Ron Lieber and Tara Siegel Bernard created a guide to connect you with information about government benefits, free services and financial strategies to get you through this crisis.
If you need temporary relief on your credit card or auto loan payments, many lenders are offering at least some help. Start with the website for your lenders and read what they have posted. Some have made their policies more stingy since Ron first reported on changes in March.
If you call for help via phone, record the conversation if you can or at least get written documentation of any changes the lender agrees to. This column from Ron explains how and why. And be sure to ask how any change might affect your credit score.
Financial losses often come with emotional strain, at the very point when people may be least likely to spend money on care for themselves. If you are in severe distress, the number for the National Suicide Prevention Hotline is 1-800-273-8255. Or text HELLO to 741741.
The National Alliance on Mental Illness maintains a help line that can provide referrals to local resources as well. Its number is 1-800-950-6264.
Catch up: Here’s what else is happening.
McDonald’s said it was expecting to hire about 260,000 restaurant employees this summer as states reopen their economies and the company welcomes customers back to its dining rooms. To protect workers and customers, the company said that it put into place nearly 50 new safety procedures, including temperature checks for employees, protective barriers for ordering and social-distancing stickers on the floor. “We want candidates and their families to know we have one goal — to keep our people safe,” said Joe Erlinger, president of McDonald’s USA.
The Bank of England said Thursday that it would hold interest rates steady at 0.1 percent but increase its purchases of British government bonds by 100 billion pounds, or about $125 billion, as it tries to help shore up the economy.
Kroger, the grocer with about 2,800 stores in 35 states, said Thursday that its sales increased to $42 billion in the quarter that ended May 23, up from $37 billion in the same period last year. Digital sales jumped 92 percent during the period marked by pandemic shutdowns. The company, which has about 500,000 employees, said it had hired 100,000 workers.
Carnival Corporation, the giant cruise company, reported Thursday that it lost $2.4 billion in the three months that ended on May 31. Carnival, which offered refunds or credits for future cruises to passengers whose voyages were canceled by the pandemic, said that about half asked for their money back. Customer demand for 2021 was increasing, it said, with about two-thirds of bookings in a recent six-week period coming fresh and one-third from customers using credits. Carnival said it could not say when it would return to normal operations.
Chanel said it expected a “significant” reduction in sales and profitability for 2020, the latest luxury business to warn on the serious hit to the sector caused by the coronavirus pandemic. On Thursday, Chanel’s global chief financial officer, Philippe Blondiaux, said the company had reopened 85 percent of its global boutiques and recorded a “double or even triple digit recovery in sales” in markets like China and India.
Reporting and research were contributed by Brooks Barnes, Niraj Chokshi, Ben Casselman, Tiffany Hsu, Coral Yang, Sapna Maheshwari, Mohammed Hadi, Amy Haimerl, Jeanna Smialek, Lauren Leatherby, Ron Lieber, Tara Siegel Bernard, Elizabeth Paton, Stacy Cowley, Jeff Sommer, Stanley Reed, Carlos Tejada and Gregory Schmidt.