Hertz 2008 Annual Report Download - page 162

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
which is net of tax of $12.6 million, attributable to the translation of our Senior Euro Notes into the U.S.
dollar, are recorded in our consolidated balance sheet in ‘‘Accumulated other comprehensive income
(loss).’’ The Senior Notes will mature in January 2014, and the Senior Subordinated Notes will mature in
January 2016. The Senior Dollar Notes bear interest at a rate per annum of 8.875%, the Senior Euro
Notes bear interest at a rate per annum of 7.875% and the Senior Subordinated Notes bear interest at a
rate per annum of 10.5%. Hertz’s obligations under the indentures are guaranteed by each of its direct
and indirect domestic subsidiaries that is a guarantor under the Senior Term Facility.
Both the indenture for the Senior Notes and the indenture for the Senior Subordinated Notes contain
covenants that, among other things, limit the ability of Hertz and its restricted subsidiaries, described in
the respective indentures, to incur more debt, pay dividends, redeem stock or make other distributions,
make investments, create liens, transfer or sell assets, merge or consolidate and enter into certain
transactions with Hertz’s affiliates. The indenture for the Senior Subordinated Notes also contains
subordination provisions and limitations on the types of senior subordinated debt that may be incurred.
The indentures also contain certain mandatory and optional prepayment or redemption provisions and
provide for customary events of default.
The restrictive covenants in the indentures governing the Senior Notes and the Senior Subordinated
Notes permit Hertz to make loans, advances, dividends or distributions to Hertz Holdings in an amount
determined by reference to, among other things, consolidated net income for the period from October 1,
2005 to the end of the most recently ended fiscal quarter for which consolidated financial statements of
Hertz are available, so long as Hertz’s consolidated coverage ratio remains greater than 2.00:1.00 after
giving pro forma effect to such restricted payments. Hertz is also permitted to make restricted payments
to Hertz Holdings in an amount not exceeding the greater of a specified minimum amount and 1% of
consolidated tangible assets (which payments are deducted in determining the amount available as
described in the preceding sentence), and in an amount equal to certain equity contributions to Hertz, in
each case, less certain investments and other restricted payments.
On January 12, 2007, Hertz completed exchange offers for its outstanding Senior Notes and Senior
Subordinated Notes whereby over 99% of the outstanding notes were exchanged for a like principal
amount of new notes with identical terms that were registered under the Securities Act of 1933 pursuant
to a registration statement on Form S-4.
Fleet Financing Facilities
U.S. Fleet Debt. In connection with the Acquisition, Hertz Vehicle Financing LLC, or ‘‘HVF,’’ a
bankruptcy-remote special purpose entity wholly-owned by Hertz, entered into an amended and
restated base indenture, dated as of December 21, 2005, with BNY Midwest Trust Company as trustee,
or the ‘‘ABS Indenture,’’ and a number of related supplements to the ABS Indenture, each dated as of
December 21, 2005, with BNY Midwest Trust Company as trustee and securities intermediary, or,
collectively, the ‘‘ABS Supplement.’’ On the Closing Date, HVF, as issuer, issued approximately
$4,300 million of new medium term asset-backed notes consisting of 11 classes of notes in two series
under the ABS Supplement, the net proceeds of which were used to finance the purchase of vehicles
from related entities and the repayment or cancellation of existing debt. HVF also issued approximately
$1,500 million of variable funding notes in two series, none of which were funded at closing. As of
December 31, 2008, $3,683.3 million were outstanding in the form of these medium term notes and
$430.2 million were outstanding in the form of variable funding notes.
Each class of notes has an expected final payment date approximately three, four or five years from the
Closing Date. The variable funding notes will be funded through the bank multi seller commercial paper
market. The assets of HVF, including the U.S. car rental fleet owned by HVF and certain related assets,
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