Hertz 2008 Annual Report Download - page 160

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restrictive covenants in the Senior Term Facility (as amended) permit cash dividends to be paid to Hertz
Holdings (i) in an aggregate amount not to exceed the greater of a specified minimum amount and 1.0%
of consolidated tangible assets less certain investments, (which payments are deducted in determining
the amount available as described in the next clause (ii)) (ii) in additional amounts up to a specified
available amount determined by reference to, among other things, 50% of consolidated net income from
October 1, 2005 to the end of the most recent fiscal quarter for which consolidated financial statements
of Hertz are available (less certain investments) and (iii) in additional amounts, up to a specified amount
of certain equity contributions made by Hertz Holdings to Hertz (less certain investments).
Restrictive covenants in the Senior ABL Facility (as amended) permit cash dividends to be paid to Hertz
Holdings in an aggregate amount, taken together with certain other investments, acquisitions and
optional prepayments, not to exceed $100 million. Hertz may also pay additional cash dividends under
the Senior ABL Facility, and in any amount, so long as (a) there is at least $250 million of availability under
the facility after giving effect to the proposed dividend, (b) if certain other payments when taken together
with the proposed dividend would exceed $50 million in a 30-day period, Hertz can demonstrate
projected average availability in the following six-month period of $250 million or more, (c) (i) Hertz is in
pro forma compliance with the consolidated leverage ratio and consolidated fixed charge coverage ratio
set forth in the Senior ABL Facility or (ii) the amount of the proposed dividend does not exceed the sum
of (x) 1.0% of consolidated tangible assets plus (y) a specified available amount determined by reference
to, among other things, 50% of consolidated net income from October 1, 2005 to the end of the most
recent fiscal quarter for which consolidated financial statements of Hertz are available (which amount is
net of amounts paid under the foregoing clause (x)) plus (z) a specified amount of certain equity
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,’’
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