Hertz 2007 Annual Report Download - page 144

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
one. Failure to comply with the financial covenants under the Senior Credit Facilities would result in a
default under the credit agreements governing the Senior Credit Facilities and, absent a waiver or an
amendment from the lenders, permit the acceleration of all outstanding borrowings under the Senior
Credit Facilities. As of December 31, 2007, Hertz was in compliance with such financial covenants. The
Senior Credit Facilities are subject to certain mandatory prepayment requirements and provide for
customary events of default.
Restrictive covenants in the Senior Term Facility (as amended) permit cash dividends to be paid to Hertz
Holdings (i) in an aggregate amount not to exceed the greater of a specified minimum amount and 1.0%
of consolidated tangible assets less certain investments, (ii) in additional amounts at any time, up to a
specified available amount determined by reference to, among other things, 50% of consolidated net
income from October 1, 2005 to the end of the most recent fiscal quarter for which consolidated financial
statements of Hertz are available and (iii) in additional amounts at any time, up to a specified amount of
certain equity contributions made by Hertz Holdings to Hertz.
Restrictive covenants in the Senior ABL Facility (as amended) permit cash dividends to be paid to Hertz
Holdings in an aggregate amount, taken together with certain other investments, acquisitions and
optional prepayments, not to exceed $100 million. Hertz may also pay additional cash dividends under
the Senior ABL Facility at any time, and in any amount, so long as (a) there is at least $250 million of
availability under the facility after giving effect to the proposed dividend, (b) if certain other payments
when taken together with the proposed dividend would exceed $50 million in a 30-day period, Hertz can
demonstrate projected average availability in the following six-month period of $250 million or more and
(c) (i) Hertz is in pro forma compliance with the consolidated leverage ratio and consolidated fixed
charge coverage ratio set forth in the Senior ABL Facility or (ii) the amount of the proposed dividend
does not exceed the sum of (x) 1.0% of consolidated tangible assets plus (y) a specified available
amount determined by reference to, among other things, 50% of consolidated net income from
October 1, 2005 to the end of the most recent fiscal quarter for which consolidated financial statements
of Hertz are available plus (z) a specified amount of certain equity contributions made by Hertz Holdings
to the borrowers under such facility.
On June 30, 2006, Hertz entered into amendments to each of its Senior Term Facility and Senior ABL
Facility. The amendments provide, among other things, for additional capacity under the covenants in
these credit facilities to enter into certain sale and leaseback transactions, to pay cash dividends and
make loans to Hertz Holdings that would, among other things, provide Hertz Holdings with cash for the
payment of interest on Hertz Holdings’ indebtedness (including, but not limited to, the Hertz Holdings
Loan Facility) and, in the case of the amendment to the Senior Term Facility, to make investments. The
ability of Hertz to pay cash dividends and make loans to Hertz Holdings remains subject to Hertz’s
meeting specified financial tests, as described above, as well as requirements imposed by applicable
Delaware law. The amendment to the Senior Term Facility also permits Hertz to use proceeds of the
$293 million Delayed Draw Term Loan to repay borrowings outstanding under the Senior ABL Facility, in
addition to repaying certain other outstanding indebtedness of Hertz. On May 15, 2006, Hertz borrowed
approximately $84.9 million under the Delayed Draw Term Loan and used the proceeds thereof to repay
its 6.5% Senior Notes due 2006. Hertz borrowed the remaining portion of the Delayed Draw Term Loan
on July 10, 2006, and applied the proceeds thereof to repay borrowings outstanding under the Senior
ABL Facility.
On February 9, 2007, Hertz entered into an amendment to its Senior Term Facility. The amendment was
entered into for the purpose of (i) lowering the interest rates payable on the Senior Term Facility by up to
50 basis points from the interest rates previously payable thereunder, and revising financial ratio
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