Hertz 2008 Annual Report Download - page 125

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
On July 24, 2008, 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 Mandated
Lead Arrangers, Calyon, as Co-Arranger, BNP Paribas, The Royal Bank of Scotland plc, and Calyon, as
Joint Bookrunners, BNP Paribas, as Facility Agent, BNP Paribas, as Security Agent, BNP Paribas, as
Global Coordinator, and the financial institutions named therein, entered into an amendment agreement,
or the ‘‘Amendment Agreement,’’ amending the revolving bridge loan facilities agreement, dated
December 21, 2005 and amended as of March 21, 2007 and December 21, 2007 (as further amended by
the Amendment Agreement, or the ‘‘SBFA’’). The Amendment Agreement, which became effective on
July 24, 2008, was entered into primarily for the purpose of (i) amending certain terms affecting the
margins on the revolving bridge loan facilities established by the SBFA, and (ii) effecting certain
technical and administrative changes to the terms of the facilities in connection with the launch of the
International ABS Fleet Financing Facility described below.
For the year ended December 31, 2008, we recorded $30.0 million related to the write-off of deferred
financing costs associated with those countries outside the United States as to which take-out asset-
based facilities have not been entered into.
Fleet Financing Facility. On September 29, 2006, Hertz and Puerto Ricancars, Inc., a Puerto Rican
corporation and wholly-owned indirect subsidiary of Hertz, or ‘‘PR Cars,’’ entered into a credit
agreement to finance the acquisition of Hertz’s and/or PR Cars’ fleet in Hawaii, Kansas, Puerto Rico and
St. Thomas, the U.S. Virgin Islands, dated as of September 29, 2006, or the ‘‘Fleet Financing Facility,’’
with the several banks and other financial institutions from time to time party thereto as lenders, Gelco
Corporation d.b.a. GE Fleet Services, or the ‘‘Fleet Financing Agent,’’ as administrative agent, as
collateral agent for collateral owned by Hertz and as collateral agent for collateral owned by PR Cars.
Affiliates of Merrill Lynch & Co. are lenders under the Fleet Financing Facility.
The Fleet Financing Facility provides (subject to availability under a borrowing base) a revolving credit
facility of up to $275 million to Hertz and PR Cars. On September 29, 2006, Hertz borrowed $124 million
under this facility to refinance other debt. As of December 31, 2008, Hertz and PR Cars had
$121.3 million (net of a $1.2 million discount) and $28.0 million, respectively, of borrowings outstanding
under this facility. The borrowing base formula is subject to downward adjustment upon the occurrence
of certain events and (in certain other instances) at the permitted discretion of the Fleet Financing Agent.
The Fleet Financing Facility will mature in December 2011 but Hertz and PR Cars may terminate or
reduce the commitments of the lenders thereunder at any time. The Fleet Financing Facility is subject to
mandatory prepayment in the amount by which outstanding extensions of credit to Hertz or PR Cars
exceed the lesser of the Hertz or PR Cars borrowing base, as applicable, and the commitments then in
effect.
The obligations of each of the borrowers under the Fleet Financing Facility are guaranteed by each of
Hertz’s direct and indirect domestic subsidiaries (other than subsidiaries whose only material assets
consist of securities and debt of foreign subsidiaries and related assets, subsidiaries involved in the ABS
Program or other similar special purpose financings, subsidiaries with minority ownership positions,
certain subsidiaries of foreign subsidiaries and certain immaterial subsidiaries). In addition, the
obligations of PR Cars are guaranteed by Hertz. The obligations of Hertz under the Fleet Financing
Facility and the other loan documents, including, without limitation, its guarantee of PR Cars’ obligations
under the Fleet Financing Facility, are secured by security interests in Hertz’s rental car fleet in Hawaii
and by certain assets related to Hertz’s rental car fleet in Hawaii and Kansas, including, without
limitation, manufacturer repurchase program agreements. PR Cars’ obligations under the Fleet
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