Hertz 2008 Annual Report Download - page 166

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The subsidiaries conducting the car rental business in certain European jurisdictions may, at their
option, continue to engage in capital lease financings relating to revenue earning equipment outside the
International Fleet Debt facilities. As of December 31, 2008, there were $25.9 million of capital lease
financings outstanding. These capital lease financings are included in the International Fleet Debt total.
In May 2006, in connection with the forecasted issuance of the permanent take-out international asset-
based facilities, HIL purchased two swaptions for e3.3 million, to protect itself from interest rate
increases. These swaptions gave HIL the right, but not the obligation, to enter into three year interest rate
swaps, based on a total notional amount of e600 million at an interest rate of 4.155%. The swaptions
were renewed twice in 2007, prior to their scheduled expiration dates of March 15, 2007 and
September 5, 2007, at a total cost of e2.7 million and were due to expire on June 5, 2008. On June 4,
2008, these swaptions were sold for a realized gain of e9.4 million (or $14.8 million). Additionally, on
June 4, 2008, HIL purchased two new swaptions for e8.6 million, to protect itself from interest rate
increases associated with the International ABS Fleet Financing Facility, which closed on July 24, 2008.
These swaptions were based on an underlying transaction with a notional amount of e600 million at an
interest rate of 4.25%. On October 10, 2008, the outstanding swaptions were terminated and Hertz
received a e1.9 million payment from counterparties. See Note 13—Financial Instruments.
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.
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