How can increasing debt boost potential returns? May 26 2020. Why Even Carl Icahn Couldn't Save Hertz From Chapter 11 - Bloomberg


  Hertz’s debt binge began when it was acquired by private equity firms from Ford Motor Co. in 2005; the new owners quickly took out a \$1 billion dividend. Piling on debt juiced the potential returns for the owners and helped pay the inflated \$2.3 billion price tag for the Dollar and Thrifty brands in 2012, which Hertz struggled to integrate.


Doesn't the embolded sentence above contradict the one below? Wouldn't debt lower potential returns, if you can't re-pay it and the interest?  

Oct 16 2006. Hertz share sale raises \$1.32 billion - The New York Times


  Hertz Global Holdings has raised \$1.32 billion in one of the largest initial public offerings of the year, less than 12 months after private- equity firms bought the company, according to an underwriter.
  
  The offering of more than 88 million shares, which represents about a 27.5 percent stake in the company, sold Wednesday for \$15 per share. Hertz said last month that it hoped to sell shares for \$16 to \$18 each.
  
  Clayton Dubilier &amp; Rice, Carlyle Group and Merrill Lynch put up \$2.3 billion of the \$15 billion including debt that they paid for Hertz in December. The firms rattled potential investors by adding debt, raising the company's interest costs and pushing down profit.
  
  "The offering wasn't in high demand, or they wouldn't have had to lower the price in order to get it sold," said Kevin Miller, a partner at Alston &amp; Bird in New York. "This thing isn't going to pop."
The first statement refers to the return on investment to the owners of the shares. After they are paid the 1 B dollar dividend  what happens to the company afterwards is not going to change that fact. Of course they would prefer that the company continue to do well. If they sell the shares immediately after receiving the dividend then they don't care.  Since the company had  1 B dollars less equity after paying the dividend it is easy to understand that in or near 2005 they would want to replace that capital with new debt and your quote suggests that is what happened. Less equity and more debt, if all else is unchanged, results in higher ROE (return on equity) which is one of the company's measures. Owners might benefit from this measure improving if the market likes it. Of course all else is not unchanged because they have to pay interest on the new debt. The actual effect on ROE depends upon circumstances. So the dividend was certainly good for the owners and what happens afterwards is potentially good but uncertain for the owners.
The part of the second statement, &quot;raising the company's interest costs and pushing down profit&quot;, refers of course to the company's profitability position. In other words this can be interpreted as the company's return on revenue (profit margin); not the owner's return on investment.