Take it back. That's what general counsel Jeffrey Zimmerman, of Hertz Global Holdings Inc., has demanded from a research firm that put Hertz on a list of companies "likely to go bankrupt or suffer severe financial distress."
First Zimmerman wrote a letter to the chief executive of Audit Integrity, the Los Angeles research firm, accusing the firm of reaching "incomplete and misleading conclusions" in a Sept. 15 report that listed Hertz and 19 other large companies it considers at risk of bankruptcy.
Zimmerman copied the letter to the GCs of the other 19 companies, including Louis Briskman at CBS Corp., Jennifer Vogel at Continental Airlines Inc., Thomas Cody at Macy's Inc., Patrick Donnelly at Sirius XM Radio Inc., and Charles Wunsch at Sprint Nextel Corp. He encouraged the other 19 to join Hertz "in protecting the investing public." (Also copied were Richard Parker and Irv Gornstein at O'Melveny & Myers.)
In the Sept. 22 letter, Zimmerman questioned Audit Integrity's methods and demanded a retraction. The letter said, "These types of conclusions should not be promoted lightly in a macro environment like the one impacting all of us today. As has happened here, the media is all too eager to republish this disinformation, which harms successful businesses and misleads the investing public."
Then, on Monday, Zimmerman and Hertz sued Audit Integrity for defamation and trade libel in the Superior Court of New Jersey, where Hertz is based. The suit also seeks undetermined financial damages, a retraction and an apology, and attorney fees and costs. The suit is: Hertz Global Holdings Inc v. Audit Integrity Inc. Superior Court of New Jersey (Bergen County).
Hertz said Audit Integrity CEO Jack Zwingli discussed the list of distressed companies on CNBC television. "The unmistakable assertion disseminated by defendants in their public statements is that Hertz lacks integrity, lies to shareholders and others, engages in fraudulent financial reporting, and is heading for bankruptcy," Hertz said.
Zwingli said in a statement, "We are disappointed that Hertz has taken this action in an attempt to stifle an opinion they do not agree with. We firmly stand behind our methodology and findings, and will vigorously defend ourselves against this unwarranted litigation."
In fact, Hertz's most recent annual report to the Securities & Exchange Commission, filed March 9, contains several pages of financial risk factors. In citing over $11 billion in debt, the report said, "We have substantial debt and may incur substantial additional debt, which could adversely affect our financial condition, our ability to obtain financing in the future and our ability to react to changes in our business."
But Zimmerman's letter offered several financial high points for Hertz recently, including a just-completed refinancing of $2 billion in debt one year ahead of schedule. "Moody's credit rating of Aa1 for these notes is squarely at odds with your predictions that we represent a bankruptcy risk," it countered.