Hertz 2009 Annual Report Download - page 57

ITEM 1A. RISK FACTORS (Continued)
The Sponsors currently control us and the interests of our Sponsors may conflict with our interests
and the interests of our other stockholders now, and in the future.
Clayton, Dubilier & Rice Fund VII, L.P. and related funds, Carlyle Partners IV, L.P. and related funds and
ML Global Private Equity Fund, L.P. and related funds (together with certain of their affiliates) currently
beneficially own approximately 19.5%, 17.4% and 14.3%, respectively, of the outstanding shares of the
common stock of Hertz Holdings. These funds and Hertz Holdings are parties to a Stockholders
Agreement, pursuant to which the funds have agreed to vote in favor of nominees to our board of
directors nominated by the other funds. As a result, the Sponsors control us and our board of directors,
and will continue to have significant influence over matters requiring stockholder approval and our policy
and affairs for so long as they continue to hold a significant amount of our common stock. There can be
no assurance that the interests of the Sponsors will not conflict with those of our other stockholders. The
Sponsors have the ability to prevent any transaction that requires the approval of stockholders, including
many possible change in control transactions, regardless of whether or not our other stockholders
believe that such a transaction is in their own best interests. Additionally, the Sponsors are in the
business of making investments in companies and may from time to time acquire and hold interests in
businesses that compete directly or indirectly with us. One or more of the Sponsors may also pursue
acquisition opportunities and other corporate opportunities that may be complementary to our business
and, as a result, those opportunities may not be available to us. So long as investment funds associated
with or designated by the Sponsors continue to control the election of directors and/or directly or
indirectly own a significant amount of the outstanding shares of our common stock, even if that amount
is less than 50%, the Sponsors will continue to be able to strongly influence and/or effectively control our
decisions. See Note 13 to the Notes to our consolidated financial statements included in this Annual
Report under caption ‘‘Item 8—Financial Statements and Supplemental Data.’’
Risks Relating to Our Substantial Indebtedness
Our substantial level of indebtedness could adversely affect our results of operations, cash flows
and ability to compete in our industry.
As of December 31, 2009, we had an aggregate principal amount of debt outstanding of
$10,530.4 million and a debt to equity ratio, calculated using the total amount of our outstanding debt net
of unamortized discounts, of 4.9 to 1. Our substantial debt could have important consequences to us.
For example, it could:
•make it more difficult for us to satisfy our obligations to the holders of our outstanding debt
securities and to the lenders under our various credit facilities, resulting in possible defaults on,
and acceleration of, such indebtedness;
•require us to dedicate a substantial portion of our cash flows from operations to make payments
on our debt, which would reduce our ability to fund working capital, capital expenditures or other
general corporate purposes;
•require us to sell assets, seek to obtain additional equity capital or restructure our indebtedness;
•increase our vulnerability to general adverse economic and industry conditions, including interest
rate fluctuations, because a portion of our borrowings are at variable rates of interest;
•place us at a competitive disadvantage to any of our competitors that have proportionately less
debt or comparable debt at more favorable interest rates;
•limit our ability to refinance our existing indebtedness or borrow additional funds in the future;
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