Investing.com -- Shares in Hertz Global Holdings Inc (NYSE:HTZ) jumped by nearly 15% in after-hours trading after the largest rental car company in the U.S. announced a comprehensive restructuring program on Thursday.
By the second quarter of fiscal year 2016, the Florida-based company expects to separate its equipment rental division or HERC from the rest of its business. The new equipment rental company expects to focus its capital allocation on fleet investment to drive growth, opportunistic acquisitions and debt reduction, Hertz said in a statement.At separation, the company expects that HERC will have a leverage ratio of nearly four times net debt to its corporate EBITDA.
In addition, the company completed a restatement of its financial accounting on Thursday when it identified accounting missteps from 2011 through 2013, in SEC 10-K filings. The process resulted in a loss of profits of more than $50 in 2012 and 2013.
Last November, Hertz hired John Tague as its new CEO in an effort to revitalize its fledgling brand. Over the last 12 months, Hertz shares had been down more than 40% prior to Thursday's announcement.
"Today's filings are an important step forward, and our attention is now on realizing Hertz's full potential," Hertz CEO John Tague said in a statement. "While much work remains, I thank the Hertz team for their efforts to bring our filings up to date while continuing to remain focused on our customers and our future."
The company said it remains committed to completing a previously announced $1 billion stock buyback plan, funded in part from the cash flow generations raised through the sale of the HERC operations in France and Spain. Hertz also updated its cost savings reduction target on Thursday, raising its projected cost savings from $200 to $300 million.
"Going forward, we are committed to developing a differentiated customer experience and premium brand position for Hertz that is number one in the industry," Tague added. "2015 is a transition year for Hertz. We are making important investments in our fleet, systems and service, and adding new talent to complement the existing expertise throughout the company."
Hertz shares gained 2.46 or 14.48% in after-hours trading to 19.45.