Hertz 2011 Annual Report Download - page 63

ITEM 1A. RISK FACTORS (Continued)
Risks Relating to Our Common Stock
Hertz Holdings is a holding company with no operations of its own and 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 or to pay dividends on its common stock is 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 or the service of its debt. In addition, certain states’ laws and the
terms of certain of our debt agreements significantly restrict, or prohibit, the ability of Hertz and its
subsidiaries to pay dividends, make loans or otherwise transfer assets to Hertz Holdings, including state
laws that require dividends to be paid only from surplus. If Hertz Holdings’ does not receive cash from its
subsidiaries, then Hertz Holdings financial condition could be materially adversely affected.
Our share price may decline if our Sponsors sell a large number of our shares or if we issue a large
number of new shares.
Approximately 38% of our outstanding shares are held by our Sponsors. We have a significant number of
authorized but unissued shares, including shares available for issuance pursuant to our various equity
plans. A sale of a substantial number of our shares or other equity-related securities in the public market
pursuant to new issuances (by us or upon the conversion of our Convertible Senior Notes (as defined
below)) or by significant stockholders (such as by our Sponsors) could depress the market price of our
stock and impair our ability to raise capital through the sale of additional equity securities. Any such sale
or issuance would dilute the ownership interests of the then-existing stockholders, and could have
material adverse effect on the market price of our common stock or the value of the Convertible Senior
Notes. The price of our common stock could be materially adversely 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. In addition, the price of our
common stock could be materially adversely affected if the existence of the Convertible Senior Notes
encourages short selling by market participants.
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