Hertz 2007 Annual Report Download - page 149

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and ratably with borrowings under the Senior Term Facility. The assets that collateralize the International
Fleet Debt facilities will not be available to satisfy the claims of Hertz’s general creditors.
The facilities under each of the tranches mature five years from the Closing Date of the Acquisition.
Subject to certain exceptions, the loans are subject to mandatory prepayment and reduction in
commitment amounts equal to the net proceeds of specified types of take-out financing transactions
and asset sales.
The interest rates per annum applicable to loans under the International Fleet Debt facilities are based on
fluctuating rates of interest measured by reference to one-month LIBOR, EURIBOR or their equivalents
for local currencies as appropriate (in the case of the Tranche A1 and A2 loans); relevant local currency
base rates (in the case of Tranche B loans); or one-month EURIBOR (in the case of the Tranche C loans),
in each case plus a borrowing margin. In addition, the borrowers under each of Tranche A1, Tranche A2,
Tranche B and Tranche C of the International Fleet Debt facilities will pay fees on the unused
commitments of the lenders under the applicable tranche, and other customary fees and expenses in
respect of such facilities, and the Tranche A1 and A2 borrowing margins are subject to increase if HIL
does not repay borrowings thereunder within specified periods of time and upon the occurrence of other
specified events.
The International Fleet Debt facilities contain a number of covenants (including, without limitation,
covenants customary for transactions similar to the International Fleet Debt facilities) that, among other
things, limit or restrict the ability of our subsidiary, HIL, the borrowers and the other subsidiaries of HIL to
dispose of assets, incur additional indebtedness, incur guarantee obligations, create liens, make
investments, make acquisitions, engage in mergers, make negative pledges, change the nature of their
business or engage in certain transactions with affiliates. In addition, HIL is restricted from making
dividends and other restricted payments (which may include payments of intercompany indebtedness)
in an amount greater than e100 million plus a specified excess cash flow amount calculated by reference
to excess cash flow in earlier periods. Subject to certain exceptions, until such time as 50% of the
commitments under the International Fleet Debt facilities as of the closing date of the Acquisition have
been replaced by permanent take-out international asset-based facilities, the specified excess cash flow
amount will be zero. Thereafter, this specified excess cash flow amount will be between 50% and 100%
of cumulative excess cash flow based on the percentage of the International Fleet Debt facilities that
have been replaced by permanent take-out international asset-based facilities. As a result of the
contractual restrictions on HIL’s ability to pay dividends to Hertz as of December 31, 2007, the restricted
net assets of our consolidated subsidiaries exceeded 25% of our total consolidated net assets.
The subsidiaries conducting the car rental business in certain European jurisdictions may, at their
option, continue to engage in capital lease financings relating to revenue earning equipment outside the
International Fleet Debt facilities. As of December 31, 2007, there were $30.8 million of capital lease
financings outstanding. These capital lease financings are included in the International Fleet Debt total.
In May 2006, in connection with the forecasted issuance of the permanent take-out international asset-
based facilities, HIL purchased two swaptions for e3.3 million, to protect itself from interest rate
increases. These swaptions gave HIL the right, but not the obligation, to enter into three year interest rate
swaps, based on a total notional amount of e600 million at an interest rate of 4.155%. The swaptions
were renewed twice in 2007, prior to their scheduled expiration dates of March 15, 2007 and
September 5, 2007, at a total cost of e2.7 million, and now expire on June 5, 2008. See Note 13—
Financial Instruments.
On December 21, 2007, HIL, certain of its subsidiaries (all of which are organized outside the United
States), Hertz Europe Limited, as Coordinator, BNP Paribas and The Royal Bank of Scotland plc, as
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