Hertz 2008 Annual Report Download - page 118

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
contributions made by Hertz Holdings to the borrowers under such facility and (d) no default exists or
would result from such dividends.
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 permitted 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
requirements for specific interest rate levels; (ii) eliminating certain mandatory prepayment
requirements; (iii) increasing the amounts of certain other types of indebtedness that Hertz and its
subsidiaries may incur outside of the Senior Term Facility; (iv) permitting certain additional asset
dispositions and sale and leaseback transactions; and (v) effecting certain technical and administrative
changes to the Senior Term Facility. During the year ended December 31, 2007, Hertz recorded an
expense of $14.0 million, in its consolidated statement of operations, in ‘‘Interest, net of interest income,’’
associated with the write-off of debt costs in connection with the amendment of the Senior Term Facility.
Additionally, in February 2007, Hertz permanently repaid a portion of the Senior Term Facility, bringing
the maximum borrowings thereunder down from $2,000 million to $1,400 million.
On February 15, 2007, Hertz, Hertz Equipment Rental Corporation and certain other subsidiaries entered
into an amendment to its Senior ABL Facility. The amendment was entered into for the purpose of
(i) lowering the interest rates payable on the Senior ABL Facility by up to 25 basis points from the interest
rates previously payable thereunder, and revising financial ratio requirements for specific interest rate
levels; (ii) increasing the availability under the Senior ABL Facility from $1,600 million to $1,800 million;
(iii) extending the term of the commitments under the Senior ABL Facility to February 15, 2012;
(iv) increasing the amounts of certain other types of indebtedness that the borrowers and their
subsidiaries may incur outside of the Senior ABL Facility; (iv) permitting certain additional asset
dispositions and sale and leaseback transactions; and (v) effecting certain technical and administrative
changes to the Senior ABL Facility. During the year ended December 31, 2007, we recorded an expense
of $2.2 million in our consolidated statement of operations, in ‘‘Interest, net of interest income,’’
associated with the write-off of debt costs in connection with the amendment of the Senior ABL Facility.
On May 23, 2007, the Senior ABL Facility and the Senior Term Facility were each amended to permit
Hertz and its subsidiaries to guarantee obligations in respect to the deferred purchase price of vehicles
and all other obligations arising under vehicle supply agreements entered into by Fleetco (Espana), S.L.,
an entity created to own the Spanish rental car fleet in connection with the pending securitization of the
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