Hertz 2008 Annual Report Download - page 165

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The International Fleet Debt facilities consist of four revolving loan tranches (Tranches A1, A2, B and C),
each subject to borrowing bases comprising the revenue earning equipment and related assets of each
applicable borrower or the corresponding fleet owned entity. A portion of the Tranche C loan is available
for the issuance of letters of credit.
The obligations of the borrowers under the International Fleet Debt facilities are guaranteed by HIL, and
by the other borrowers and certain related entities under the applicable tranche, in each case subject to
certain legal, tax, cost and other structuring considerations. The obligations and the guarantees of the
obligations of the Tranche A borrowers under the Tranche A2 loans are subordinated to the obligations
and the guarantees of the obligations of such borrowers under the Tranche A1 loans. Subject to legal,
tax, cost and other structuring considerations and to certain exceptions, the International Fleet Debt
facilities are secured by a material part of the assets of each borrower, certain related entities and each
guarantor, including pledges of the capital stock of each borrower and certain related entities. The
obligations of the Tranche A borrowers under the Tranche A2 loans and the guarantees thereof are
secured on a junior second priority basis by any assets securing the obligations of the Tranche A
borrowers under the Tranche A1 loans and the guarantees thereof. The assets that collateralize the
International Fleet Debt facilities will not be available to satisfy the claims of Hertz’s general creditors.
The facilities under each of the tranches mature five years from the Closing Date of the Acquisition.
Subject to certain exceptions, the loans are subject to mandatory prepayment and reduction in
commitment amounts equal to the net proceeds of specified types of take-out financing transactions
and asset sales.
The interest rates per annum applicable to loans under the International Fleet Debt facilities are based on
fluctuating rates of interest measured by reference to one-month LIBOR, Euro inter-bank offered rates, or
‘‘EURIBOR,’’ or their equivalents for local currencies as appropriate (in the case of the Tranche A1 and
A2 loans); relevant local currency base rates (in the case of Tranche B loans); or one-month EURIBOR
(in the case of the Tranche C loans), in each case plus a borrowing margin. In addition, the borrowers
under each of Tranche A1, Tranche A2, Tranche B and Tranche C of the International Fleet Debt facilities
will pay fees on the unused commitments of the lenders under the applicable tranche, and other
customary fees and expenses in respect of such facilities, and the Tranche A1 and A2 borrowing margins
are subject to increase if HIL does not repay borrowings thereunder within specified periods of time and
upon the occurrence of other specified events.
The International Fleet Debt facilities contain a number of covenants (including, without limitation,
covenants customary for transactions similar to the International Fleet Debt facilities) that, among other
things, limit or restrict the ability of our subsidiary, HIL, the borrowers and the other subsidiaries of HIL to
dispose of assets, incur additional indebtedness, incur guarantee obligations, create liens, make
investments, make acquisitions, engage in mergers, make negative pledges, change the nature of their
business or engage in certain transactions with affiliates. In addition, HIL is restricted from making
dividends and other restricted payments (which may include payments of intercompany indebtedness)
in an amount greater than e100 million plus a specified excess cash flow amount calculated by reference
to excess cash flow in earlier periods. Subject to certain exceptions, until such time as 50% of the
commitments under the International Fleet Debt facilities as of the closing date of the Acquisition have
been replaced by permanent take-out international asset-based facilities, the specified excess cash flow
amount will be zero. Thereafter, this specified excess cash flow amount will be between 50% and 100%
of cumulative excess cash flow based on the percentage of the International Fleet Debt facilities that
have been replaced by permanent take-out international asset-based facilities. As a result of the
contractual restrictions on HIL’s ability to pay dividends to Hertz as of December 31, 2008, the restricted
net assets of our consolidated subsidiaries exceeded 25% of our total consolidated net assets.
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