Hertz 2009 Annual Report Download - page 62

ITEM 1A. RISK FACTORS (Continued)
Risks Relating to Our Common Stock
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, including debt service obligations in connection with
its Convertible Senior Notes, or to pay dividends on its common stock, 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. The terms of the indentures governing our Senior Notes and
Senior Subordinated Notes and the agreements governing our senior credit facilities and fleet debt
facilities also significantly restrict the ability of Hertz and its subsidiaries to pay dividends or otherwise
transfer assets to Hertz Holdings. Furthermore, the subsidiaries of Hertz are permitted under the terms of
our Senior Credit Facilities and other indebtedness to incur additional indebtedness that may severely
restrict or prohibit the making of distributions, the payment of dividends or the making of loans by Hertz
and its subsidiaries to Hertz Holdings, and these facilities do not restrict the ability of Hertz Holdings to
incur additional debt. See ‘‘—Restrictive covenants in certain of the agreements and instruments
governing our indebtedness may adversely affect our financial flexibility’’ in this Annual Report. In
addition, Delaware law may impose requirements that may restrict Hertz’s ability to make funds available
to Hertz Holdings, and Hertz Holdings ability to make funds available to its common stock holders.
Our share price may decline if our Sponsors sell a large number of shares or if we issue a large
number of new shares.
There were 410,245,225 shares of our common stock outstanding as of December 31, 2009. A majority
of these outstanding shares are held by our Sponsors and are restricted securities within the meaning of
Rule 144 under the Securities Act, and are not currently freely tradable, but they are eligible for resale
subject to applicable volume, manner of sale, holding period and other limitations of Rule 144 or
pursuant to an exemption from registration under Rule 701 under the Securities Act. In addition, the
Sponsors have the right under certain circumstances to require that we register their shares, 210 million
as of February 23, 2010, for resale. We also have another 8.9 million shares of common stock available
for issuance pursuant to our various equity plans.
Sales of a substantial number of shares of our common stock or other equity-related securities in the
public market pursuant to new issuances of common stock, by significant selling stockholders as well as
issuances of shares of common stock upon conversion of our Convertible Senior Notes could depress
the market price of our common stock and impair our ability to raise capital through the sale of additional
equity securities. Any such future sales or issuances will dilute the ownership interests of stockholders,
and we cannot predict the effect that future sales or issuances of our common stock or other equity-
related securities would have on the market price of our common stock or the value of the Convertible
Senior Notes, nor can we predict our future needs to fund our operations or balance sheet with future
equity issuances. The price of our common stock could be affected by possible sales of our common
stock by investors who view the Convertible Senior Notes as a more attractive means of equity
participation in our company and by hedging or arbitrage trading activity that we expect to develop
involving our common stock as a result of the 2009 Offerings. In addition, the existence of the
Convertible Senior Notes may encourage short selling by market participants because the conversion of
the Convertible Senior Notes could depress the price of our common stock.
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