Hertz 2010 Annual Report Download - page 121

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Senior ABL Facility: In December 2005, Hertz, HERC and certain other of our subsidiaries entered into
a credit agreement that provides for aggregate maximum borrowings of $1,800.0 million (subject to
borrowing base availability) on a revolving basis under an asset-based revolving credit facility (as
amended, the ‘‘Senior ABL Facility’’). Up to $600.0 million of the Senior ABL Facility is available for the
issuance of letters of credit.
We refer to the Senior Term Facility and the Senior ABL Facility together as the ‘‘Senior Credit Facilities.’’
Hertz’s obligations under the Senior Credit Facilities are guaranteed by its immediate parent (Hertz
Investors, Inc.) and most of its direct and indirect domestic subsidiaries (subject to certain exceptions,
including Hertz International Limited, which ultimately owns entities carrying on most of our international
operations, and subsidiaries involved in the U.S. ABS Program). In addition, the obligations of the
‘‘Canadian borrowers’’ under the Senior ABL Facility are guaranteed by their respective subsidiaries, if
any, subject to limited exceptions.
The lenders under the Senior Credit Facilities have been granted a security interest in substantially all of
the tangible and intangible assets of the borrowers and guarantors under those facilities, including
pledges of the stock of certain of their respective subsidiaries (subject, in each case, to certain
exceptions, including certain vehicles).
The Senior Credit Facilities contain a number of covenants that, among other things, limit or restrict the
ability of Hertz and its subsidiaries (which we refer to as the ‘‘Hertz credit group’’) to dispose of assets,
incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make dividends
and other restricted payments (including to the parent entities of Hertz and other persons), create liens,
make investments, make acquisitions, engage in mergers, fundamentally change the nature of their
business, make capital expenditures, or engage in certain transactions with affiliates that are not within
the Hertz credit group.
Under the Senior Term Facility, the Hertz credit group is subject to financial covenants, including a
requirement to maintain a specified leverage ratio and a specified interest coverage ratio for specified
periods.
Under the Senior ABL Facility, if the borrowers fail to maintain a specified minimum level of borrowing
availability, the Hertz credit group will then be subject to financial covenants under such facility, including
a specified leverage ratio and a specified fixed charge coverage ratio.
Covenants in the Senior Term Facility restrict payment of cash dividends to any parent of Hertz, including
Hertz Holdings, except (i) in an aggregate amount not to exceed the greater of a specified minimum
amount and 1.0% of tangible assets less certain investments (which payments are deducted in
determining the amount available as described in the next clause (ii)), (ii) in additional amounts up to a
specified available amount determined by reference to, among other things, 50% of net income from
October 1, 2005 to the end of the most recent fiscal quarter for which financial statements of Hertz are
available (less certain investments) and (iii) in additional amounts, up to a specified amount of certain
equity contributions made to Hertz (less certain investments).
Covenants in the Senior ABL Facility restrict payment of cash dividends to any parent of Hertz, including
Hertz Holdings, except in an aggregate amount, taken together with certain other investments,
acquisitions and optional prepayments, not to exceed $100 million. Hertz may also pay additional cash
dividends under the Senior ABL Facility in any amount, so long as (a) there is at least $250 million of
borrowing base availability under the Senior ABL Facility after giving effect to the proposed dividend, (b)
if certain other payments when taken together with the proposed dividend would exceed $50 million in a
30-day period, Hertz can demonstrate projected average borrowing base availability in the following six
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