Hertz 2007 Annual Report Download - page 67

Fleet Debt facilities, our Corporate EBITDA. Recent turmoil in the credit markets has reduced the
availability of debt financing, which may result in increases in the interest rates at which lenders are
willing to make future debt financing available to us. The impact of such an increase would be more
significant than it would be for some other companies because of our substantial debt. For a discussion
of how we manage our exposure to changes in interest rates through the use of interest rate swap
agreements on certain portions of our outstanding debt, see ‘‘Item 7—Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Market Risks—Interest Rate Risk.’’
Risks Relating to Our Common Stock
We may have a contingent liability arising out of electronic communications sent to institutional
accounts by a previously named underwriter that did not participate as an underwriter in the initial
public offering of our common stock.
We understand that, during the week of October 23, 2006, several e-mails authored by an employee of a
previously named underwriter for the initial public offering of our common stock were ultimately
forwarded by employees of that underwriter to approximately 175 institutional accounts. We were not
involved in any way in the preparation or distribution of the e-mail messages by the employees of this
previously named underwriter, and we had no knowledge of them until after they were sent. We
requested that the previously named underwriter notify the institutional accounts who received these
e-mail messages from its employees that the e-mail messages were distributed in error and should be
disregarded. In addition, this previously named underwriter did not participate as an underwriter in the
initial public offering of our common stock.
The e-mail messages may constitute a prospectus or prospectuses not meeting the requirements of the
Securities Act of 1933, as amended, or the ‘‘Securities Act.’’ We, the Sponsors and the other
underwriters that participated in the initial public offering of our common stock disclaim all responsibility
for the contents of these e-mail messages.
We do not believe that the e-mail messages constitute a violation by us of the Securities Act. However, if
any or all of these communications were to be held by a court to be a violation by us of the Securities Act,
the recipients of the e-mails, if any, who purchased shares of our common stock in the initial public
offering of our common stock might have the right, under certain circumstances, to require us to
repurchase those shares. Consequently, we could have a contingent liability arising out of these
possible violations of the Securities Act. The magnitude of this liability, if any, is presently impossible to
quantify, and would depend, in part, upon the number of shares purchased by the recipients of the
e-mails and the trading price of our common stock. If any liability is asserted, we intend to contest the
matter vigorously.
Hertz Holdings is a holding company with no operations of its own that depends on its subsidiaries
for cash.
The operations of Hertz Holdings are conducted almost entirely through its subsidiaries and its ability to
generate cash to meet its debt service obligations, if any, or to pay dividends is highly dependent on the
earnings and the receipt of funds from its subsidiaries via dividends or intercompany loans. However,
none of the subsidiaries of Hertz Holdings are obligated to make funds available to Hertz Holdings for
the payment of dividends. In addition, payments of dividends and interest among the companies in our
group may be subject to withholding taxes. Further, the terms of the indentures governing Hertz’s Senior
Notes and Senior Subordinated Notes and the agreements governing Hertz’s Senior Credit Facilities
and Hertz’s fleet debt facilities significantly restrict the ability of the subsidiaries of Hertz to pay dividends
or otherwise transfer assets to Hertz Holdings. Furthermore, the subsidiaries of Hertz are permitted
under the terms of Hertz’s Senior Credit Facilities and other indebtedness to incur additional
indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends
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