Hertz 2011 Annual Report Download - page 130

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On March 11, 2011, we refinanced our Former Credit Facilities. A description of our new Senior Term
Facility and new Senior ABL Facility is set forth below. During the year ended December 31, 2011, we
recorded an expense of $9.3 million in ‘‘Interest expense’’ on our consolidated statement of operations
associated with the write-off of unamortized debt costs in connection with the refinancing of our Former
Credit Facilities. Additionally, a portion of the unamortized debt costs associated with the Former Term
Facility and Former ABL Facility are continuing to be amortized over the terms of the new Senior Term
Facility and Senior ABL Facility. The determination of whether these costs were expensed or further
deferred was dependent upon whether the terms of the old and new instruments were considered to be
substantially different. In regard to the Senior Term Facility, the determination as to whether the Former
Term Facility and the new Senior Term Facility were considered to be substantially different was made on
a lender by lender basis using the ‘‘net method’’ which compares the cash flows related to the lowest
common principal balance between the old and new instruments.
Senior Term Facility: In March 2011, Hertz entered into a credit agreement that provides a
$1,400.0 million secured term loan facility, or as amended, the ‘‘Senior Term Facility.’’ In addition, the
Senior Term Facility includes a separate incremental pre-funded synthetic letter of credit facility in an
aggregate principal amount of $200.0 million. Subject to the satisfaction of certain conditions and
limitations, the Senior Term Facility allows for the incurrence of incremental term and/or revolving loans.
Hertz used approximately $1,345.0 million of borrowings under the Senior Term Facility to refinance
indebtedness under the Former Term Facility. We reflected this transaction on a gross basis in our
Consolidated Statement of Cash Flows in ‘‘Proceeds from issuance of long-term debt’’ and ‘‘Payment of
long-term debt.’’ During the year ended December 31, 2011, we recorded financing costs of $6.6 million
in ‘‘Interest expense’’ on our consolidated statement of operations associated with the new Senior Term
Facility.
Senior ABL Facility: In March 2011, Hertz, Hertz Equipment Rental Corporation, or ‘‘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, or as amended, the ‘‘Senior ABL Facility.’’ Up to $1,500.0 million of
the Senior ABL Facility is available for the issuance of letters of credit, subject to certain conditions
including issuing lender participation. Subject to the satisfaction of certain conditions and limitations, the
Senior ABL Facility allows for the addition of incremental revolving and/or term loan commitments. In
addition, the Senior ABL Facility permits Hertz to increase the amount of commitments under the Senior
ABL Facility with the consent of each lender providing an additional commitment, subject to satisfaction
of certain conditions.
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,
subject to certain 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 domestic subsidiaries (subject, in each case, to certain
exceptions, including certain vehicles). Each of the Senior Credit Facilities permits the incurrence of
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