Hertz 2008 Annual Report Download - page 116

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Financing
Senior Credit Facilities
Senior Term Facility. In connection with the Acquisition, Hertz entered into a credit agreement, dated
December 21, 2005, with respect to its Senior Term Facility with Deutsche Bank AG, New York Branch as
administrative agent and collateral agent, Lehman Commercial Paper Inc. as syndication agent, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as documentation agent, and the other
financial institutions party thereto from time to time. The facility consisted of a $2,000.0 million secured
term loan facility (which was decreased in February 2007 to $1,400.0 million) providing for loans
denominated in U.S. dollars, which included a delayed draw facility of $293.0 million (which was utilized
in 2006). In addition, there is a pre-funded synthetic letter of credit facility in an aggregate principal
amount of $250.0 million. On the Closing Date, Hertz utilized $1,707.0 million of the Senior Term Facility
and $182.2 million in letters of credit. As of December 31, 2008, we had $1,353.6 million in borrowings
outstanding under this facility, which is net of a discount of $18.6 million and had issued $226.2 million in
letters of credit. The term loan facility and the synthetic letter of credit facility will mature in December
2012. The term loan amortizes in nominal quarterly installments (not exceeding one percent of the
aggregate principal amount thereof per annum) until the maturity date. At the borrower’s election, the
interest rates per annum applicable to the loans under the Senior Term Facility are based on a fluctuating
rate of interest measured by reference to either (1) an adjusted LIBOR plus a borrowing margin or (2) an
alternate base rate plus a borrowing margin. In addition, the borrower pays letter of credit participation
fees on the full amount of the synthetic letter of credit facility plus fronting fees for the letter of credit
issuing banks and other customary fees in respect of the Senior Term Facility.
Senior ABL Facility. Hertz, Hertz Equipment Rental Corporation and certain other subsidiaries of Hertz
entered into a credit agreement, dated December 21, 2005, with respect to the Senior ABL Facility with
Deutsche Bank AG, New York Branch as administrative agent, Lehman Commercial Paper Inc. as
syndication agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as
documentation agent and the financial institutions party thereto from time to time. This facility provided
(subject to availability under a borrowing base) for aggregate maximum borrowings of $1,600.0 million
(which was increased in February 2007 to $1,800.0 million) under a revolving loan facility providing for
loans denominated in U.S. dollars, Canadian dollars, euros and pounds sterling. Up to $200.0 million of
the revolving loan facility is available for the issuance of letters of credit. On the Closing Date, Hertz
borrowed $206 million under this facility and Matthews Equipment Limited, or ‘‘Matthews,’’ one of
Hertz’s Canadian subsidiaries, borrowed CAD$225 million under this facility, in each case to finance a
portion of the Transactions. Hertz and Hertz Equipment Rental Corporation are the U.S. borrowers under
the Senior ABL Facility and Matthews and its subsidiaries Western Shut-Down (1995) Ltd. and Hertz
Canada Equipment Rental Partnership are the Canadian borrowers under the Senior ABL Facility. At
December 31, 2008, net of a discount of $13.3 million, Hertz and Matthews collectively had no
borrowings outstanding under this facility and issued $115.2 million in letters of credit. The Senior ABL
Facility will mature in February 2012. At the borrower’s election, the interest rates per annum applicable
to the loans under the Senior ABL Facility will be based on a fluctuating rate of interest measured by
reference to either (1) adjusted LIBOR plus a borrowing margin or (2) an alternate base rate plus a
borrowing margin. The borrower will pay customary commitment and other fees in respect of the Senior
ABL Facility.
Hertz’s obligations under the Senior Term Facility and the Senior ABL Facility are guaranteed by Hertz
Investors, Inc., its immediate parent and most of its direct and indirect domestic subsidiaries (subject to
certain exceptions, including for subsidiaries involved in the U.S. Fleet Debt facility and similar special
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