Hertz 2014 Annual Report Download - page 42

Table of Contents


                

Certain of our credit facilities and other asset-based and asset-backed financing arrangements contain covenants that, among other things, restrict
Hertz and its subsidiaries' ability to: (i) dispose of assets; (ii) incur additional indebtedness; (iii) incur guarantee obligations; (iv) prepay other
indebtedness or amend other financing arrangements; (v) pay dividends; (vi) create liens on assets; (vii) sell assets; (viii) make investments,
loans, advances or capital expenditures; (ix) make acquisitions; (x) engage in mergers or consolidations; (xi) change the business conducted by
us; and (xii) engage in certain transactions with affiliates.
Our Senior ABL Facility (as defined in Note 6, "Debt," to the Notes to our consolidated financial statements included in this Annual Report under
the caption Item 8, "Financial Statements and Supplementary Data”) contains a financial covenant that obligates us to maintain a specified fixed
charge coverage ratio if we fail to maintain a specified minimum level of liquidity. Our ability to comply with this covenant will depend on our
ongoing financial and operating performance, which in turn are subject to, among other things, the risks identified in “Risks Related to Our
Business.”
Additionally, the documentation of various of our (and/or our special purpose subsidiaries') financing facilities require us to file certain quarterly and
annual reports and certain of our subsidiaries to file statutory financial statements within certain time periods.
The agreements governing our financing arrangements contain numerous covenants. The breach of any of these covenants or restrictions could
result in a default under the relevant agreement, which could, in turn, cause cross- defaults under our other financing arrangements. In such event,
we may be unable to borrow under the Senior ABL Facility and certain of our other financing arrangements and may not be able to repay the
amounts due under such arrangements, which could have a material adverse effect on our business, financial condition, cash flows and results of
operations.

A significant portion of our outstanding debt bears interest at floating rates. As a result, to the extent we have not hedged against rising interest
rates, an increase in the applicable benchmark interest rates would increase our cost of servicing our debt and could materially adversely affect
our liquidity and results of operations.
In addition, we regularly refinance our indebtedness. If interest rates or our borrowing margins increase between the time an existing financing
arrangement was consummated and the time such financing arrangement is refinanced, the cost of servicing our debt would increase and our
liquidity and results of operations could be materially adversely affected.


The operations of Hertz Holdings are conducted nearly 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.
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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