Hertz 2007 Annual Report Download - page 113

consist of securities and debt of foreign subsidiaries and related assets, subsidiaries involved in the ABS
Program or other similar special purpose financings, subsidiaries with minority ownership positions,
certain subsidiaries of foreign subsidiaries and certain immaterial subsidiaries). In addition, the
obligations of PR Cars are guaranteed by Hertz. The obligations of Hertz under the Fleet Financing
Facility and the other loan documents, including, without limitation, its guarantee of PR Cars’ obligations
under the Fleet Financing Facility, are secured by security interests in Hertz’s rental car fleet in Hawaii
and by certain assets related to Hertz’s rental car fleet in Hawaii and Kansas, including, without
limitation, manufacturer repurchase program agreements. PR Cars’ obligations under the Fleet
Financing Facility and the other loan documents are secured by security interests in PR Cars’ rental car
fleet in Puerto Rico and St. Thomas, the U.S. Virgin Islands and by certain assets related thereto.
At the applicable borrower’s election, the interest rates per annum applicable to the loans under the
Fleet Financing Facility will be based on a fluctuating rate of interest measured by reference to either
(1) LIBOR plus a borrowing margin of 125 basis points or (2) an alternate base rate of the prime rate plus
a borrowing margin of 25 basis points. As of December 31, 2007, the average interest rate was 6.3%
(LIBOR based).
The Fleet Financing Facility contains a number of covenants that, among other things, limit or restrict the
ability of the borrowers and their subsidiaries to create liens, dispose of assets, engage in mergers, enter
into agreements which restrict liens on the Fleet Financing Facility collateral or Hertz’s rental car fleet in
Kansas or change the nature of their business.
During the fourth quarter of 2006, certain of the documents relating to the Fleet Financing Facility were
amended to make certain technical and administrative changes.
Brazilian Fleet Financing Facility. On April 4, 2007, our Brazilian subsidiary, Car Rental Systems Do
Brasil Locacao De Veiculos Ltda., or ‘‘Hertz Brazil,’’ entered into an agreement amending and restating
its credit facility to, among other things, increase the facility to R$130 million (or $73.2 million), consisting
of an R$70 million (or $39.4 million) term loan facility and an R$60 million (or $33.8 million) revolving
credit facility (the ‘‘Brazilian Fleet Financing Facility’’). The borrowing margin was reduced from 300
basis points over CDI (Brazil’s interbank deposit rate) to 225 basis points over CDI. The amendment also
increased the borrowing base advance rate from 80% to 85% of the value of the fleet. The credit facility is
secured by Hertz Brazil’s fleet of vehicles and backed by a $63.5 million Hertz guarantee. This facility will
mature in December 2010. As of December 31, 2007, the foreign currency equivalent of $62.9 million in
borrowings were outstanding under this facility.
Canadian Fleet Financing Facility. On May 30, 2007, our indirect subsidiary, Hertz Canada Limited, and
certain of its subsidiaries, entered into a Note Purchase Agreement with CARE Trust, a third-party special
purpose commercial paper conduit administered by Bank of Montreal, or ‘‘CARE Trust,’’ which acts as
conduit for the asset-backed borrowing facility, and certain related agreements and transactions, in
order to establish an asset-backed borrowing facility to provide financing for our Canadian rental car
fleet (the ‘‘Canadian Fleet Financing Facility’’). The new facility refinanced the Canadian portion of the
International Fleet Debt facilities. The maximum amount which may be borrowed under the new facility is
CAN$400 million (or $392.1 million). This facility matures in May 2012. As of December 31, 2007, the
foreign currency equivalent of $155.4 million in borrowings were outstanding under this facility.
On December 24, 2007, Hertz Canada Limited, an indirect subsidiary of Hertz, and certain subsidiaries
of Hertz Canada Limited, entered into a waiver and agreement with CARE Trust (the ‘‘waiver and
agreement’’). The waiver and agreement allows the borrowers to designate certain vehicles as
‘‘unfunded risk vehicles’’ during a waiver period, which began on December 24, 2007 and will end on
March 31, 2008. During the waiver period, vehicles designated as unfunded risk vehicles are excluded
from the calculation of the borrowing base and are also excluded for purposes of determining whether
certain covenants regarding the composition of the vehicle pool are satisfied.
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