Hertz 2008 Annual Report Download - page 126

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Financing Facility and the other loan documents are secured by security interests in PR Cars’ rental car
fleet in Puerto Rico and St. Thomas, the U.S. Virgin Islands and by certain assets related thereto.
At the applicable borrower’s election, the interest rates per annum applicable to the loans under the
Fleet Financing Facility will be based on a fluctuating rate of interest measured by reference to either
(1) LIBOR plus a borrowing margin of 125 basis points or (2) an alternate base rate of the prime rate plus
a borrowing margin of 25 basis points. As of December 31, 2008, the average interest rate was 2.06%
(LIBOR based).
The Fleet Financing Facility contains a number of covenants that, among other things, limit or restrict the
ability of the borrowers and their subsidiaries to create liens, dispose of assets, engage in mergers, enter
into agreements which restrict liens on the Fleet Financing Facility collateral or Hertz’s rental car fleet in
Kansas or change the nature of their business.
During the fourth quarter of 2006, certain of the documents relating to the Fleet Financing Facility were
amended to make certain technical and administrative changes.
Brazilian Fleet Financing Facility. On April 4, 2007, our Brazilian subsidiary, Car Rental Systems Do
Brasil Locacao De Veiculos Ltda., or ‘‘Hertz Brazil,’’ entered into an agreement amending and restating
its credit facility to, among other things, increase the facility to R$130 million (the equivalent of
$55.7 million as of December 31, 2008), consisting of an R$70 million (or $30.0 million) term loan facility
and an R$60 million (or $25.7 million) revolving credit facility (the ‘‘Brazilian Fleet Financing Facility’’).
The borrowing margin was reduced from 300 basis points over CDI (Brazil’s interbank deposit rate) to
225 basis points over CDI. The amendment also increased the borrowing base advance rate from 80% to
85% of the value of the fleet. The credit facility is secured by Hertz Brazil’s fleet of vehicles and backed by
a $63.5 million Hertz guarantee. That guarantee is secured equally and ratably with borrowings under
the Senior Term Facility. This facility will mature in December 2010. As of December 31, 2008, the foreign
currency equivalent of $54.1 million in borrowings were outstanding under this facility.
Canadian Fleet Financing Facility. On May 30, 2007, our indirect subsidiary, Hertz Canada Limited, and
certain of its subsidiaries, entered into a Note Purchase Agreement with CARE Trust, a third-party special
purpose commercial paper conduit administered by Bank of Montreal, or ‘‘CARE Trust,’’ which acts as
conduit for the asset-backed borrowing facility, and certain related agreements and transactions, in
order to establish an asset-backed borrowing facility to provide financing for our Canadian rental car
fleet (the ‘‘Canadian Fleet Financing Facility’’). The new facility refinanced the Canadian portion of the
International Fleet Debt facilities. The maximum amount which may be borrowed under the new facility is
CAD$400 million (or $327.5 million). This facility matures in May 2012. As of December 31, 2008, the
foreign currency equivalent of $111.6 million in borrowings were outstanding under this facility.
Belgian Fleet Financing Facility. On June 21, 2007, our Belgian subsidiary, Hertz Belgium BVBA,
entered into a secured revolving credit facility with varying facility limits of up to e27.4 million (or
$38.2 million) maturing in December 2010 (the ‘‘Belgian Fleet Financing Facility’’). The new facility
refinanced the Belgian portion of the International Fleet Debt facilities. This facility is guaranteed by HIL
and the fleet assets used in the Belgian operations are pledged as collateral for this debt. Interest is
charged at a spread over the Euribor. This facility contains a number of covenants typical for this type of
facility, including restrictions on additional indebtedness, creation of liens, engaging in mergers and
change of business. As of December 31, 2008, the foreign currency equivalent of $31.2 million in
borrowings were outstanding under this facility.
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