Hertz 2008 Annual Report Download - page 74

ITEM 1A. RISK FACTORS (Continued)
the case of the U.S. Fleet Debt and the International Fleet Debt facilities and International ABS Fleet
Financing Facility, our Corporate EBITDA. We have recently seen an increase in our borrowing spread.
In addition, recent turmoil in the credit markets has reduced the availability of debt financing, which may
result in increases in the interest rates and borrowing spreads at which lenders are willing to make future
debt financing available to us. The impact of such increases would be more significant than it would be
for some other companies because of our substantial debt. For a discussion of how we manage our
exposure to changes in interest rates through the use of interest rate swap agreements on certain
portions of our outstanding debt, see ‘‘Item 7—Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Market Risks—Interest Rate Risk.’’
Risks Relating to Our Common Stock
We may have a contingent liability arising out of electronic communications sent to institutional
accounts by a previously named underwriter that did not participate as an underwriter in the initial
public offering of our common stock.
We understand that, during the week of October 23, 2006, several e-mails authored by an employee of a
previously named underwriter for the initial public offering of our common stock were ultimately
forwarded by employees of that underwriter to approximately 175 institutional accounts. We were not
involved in any way in the preparation or distribution of the e-mail messages by the employees of this
previously named underwriter, and we had no knowledge of them until after they were sent. We
requested that the previously named underwriter notify the institutional accounts who received these
e-mail messages from its employees that the e-mail messages were distributed in error and should be
disregarded. In addition, this previously named underwriter did not participate as an underwriter in the
initial public offering of our common stock.
The e-mail messages may constitute a prospectus or prospectuses not meeting the requirements of the
Securities Act of 1933, as amended, or the ‘‘Securities Act.’’ We, the Sponsors and the other
underwriters that participated in the initial public offering of our common stock disclaim all responsibility
for the contents of these e-mail messages.
We do not believe that the e-mail messages constitute a violation by us of the Securities Act. However, if
any or all of these communications were to be held by a court to be a violation by us of the Securities Act,
the recipients of the e-mails, if any, who purchased shares of our common stock in the initial public
offering of our common stock might have the right, under certain circumstances, to require us to
repurchase those shares. Consequently, we could have a contingent liability arising out of these
possible violations of the Securities Act. The magnitude of this liability, if any, is presently impossible to
quantify, and would depend, in part, upon the number of shares purchased by the recipients of the
e-mails and the trading price of our common stock. If any liability is asserted, we intend to contest the
matter vigorously.
Hertz Holdings is a holding company with no operations of its own that depends on its subsidiaries
for cash.
The operations of Hertz Holdings are conducted almost entirely through its subsidiaries and its ability to
generate cash to meet its debt service obligations, if any, or to pay dividends is highly dependent on the
earnings and the receipt of funds from its subsidiaries via dividends or intercompany loans. However,
none of the subsidiaries of Hertz Holdings are obligated to make funds available to Hertz Holdings for
the payment of dividends. In addition, payments of dividends and interest among the companies in our
group may be subject to withholding taxes. Further, the terms of the indentures governing our Senior
Notes and Senior Subordinated Notes and the agreements governing our Senior Credit Facilities and
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