Thrifty Car Rental 2007 Annual Report Download - page 46

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Asset Backed Medium Term Notes
The asset backed medium term note program is comprised of $2.0 billion in asset backed medium term
notes with maturities ranging from 2008 to 2012. Borrowings under the asset backed medium term notes
are secured by eligible vehicle collateral and bear interest at fixed rates ranging from 4.20% to 5.27%
including certain floating rate notes swapped to fixed rates. The Company has maturities of medium term
notes totaling $500 million in 2008 and no additional maturities until 2010. The Company typically
accesses the medium term note market each year to replace maturing notes; however, the Company
does not expect to need to access this market in 2008. Proceeds from the asset backed medium term
notes that are temporarily not utilized for financing vehicles and certain related receivables are
maintained in restricted cash and investment accounts, which were approximately $95.3 million at
December 31, 2007.
On May 23, 2007, RCFC issued $500 million of five-year asset backed medium term notes (the “2007
Series Notes”) to replace maturing asset backed medium term notes and provide for growth in the
Company’s fleet. The 2007 Series Notes consist of $500 million floating rate notes at LIBOR plus 0.14%.
In conjunction with the issuance of the 2007 Series Notes, the Company also entered into interest rate
swap agreements to convert this floating rate debt to fixed rate debt at a 5.16% interest rate.
The asset backed medium term note programs each contain a minimum net worth covenant and an
interest coverage covenant in the Monoline agreements. The Company is in compliance with these
covenants at December 31, 2007. The Company will amend the existing minimum net worth covenant in
the Monoline agreements to exclude the impact of any potential goodwill write-down; or, if not amended,
a violation of this covenant can be avoided by providing additional credit enhancement.
Conduit Facility
On June 25, 2007, the Company renewed its Variable Funding Note Purchase Facility (the “Conduit
Facility”) for another 364-day period. Proceeds are used for financing of vehicle purchases and for a
periodic refinancing of asset backed notes. The Conduit Facility generally bears interest at market-based
commercial paper rates and is renewed annually. At December 31, 2007, the Company had $12.0 million
outstanding under the Conduit Facility.
The Conduit Facility contains a minimum net worth covenant and an interest coverage covenant. The
Company is in compliance with these covenants at December 31, 2007. The Company expects to modify
the existing minimum net worth covenant upon renewal of the Conduit Facility to exclude the impact of
any potential goodwill write-down.
Commercial Paper Program and Liquidity Facility
At December 31, 2007, the Company’s commercial paper program (the “Commercial Paper Program”)
had a maximum capacity of $545 million supported by a $460 million, 364-day liquidity facility (the
“Liquidity Facility”). Borrowings under the Commercial Paper Program are secured by eligible vehicle
collateral and bear interest at market-based commercial paper rates. At December 31, 2007, the
Company had $25.9 million in commercial paper outstanding under the Commercial Paper Program. The
Commercial Paper Program and the Liquidity Facility are renewable annually.
The Commercial Paper Program contains a minimum net worth covenant and an interest coverage
covenant. The Company is in compliance with these covenants at December 31, 2007. The Company
expects to modify the existing minimum net worth covenant upon renewal of the Commercial Paper
Program to exclude the impact of any potential goodwill write-down.
Vehicle Debt and Obligations
The Company finances its Canadian vehicle fleet through a fleet securitization program. Under this
program, DTG Canada can obtain vehicle financing up to CND$300 million funded through a bank
commercial paper conduit which expires May 31, 2010. At December 31, 2007, DTG Canada had
approximately CND$134.7 million (US$135.5 million) funded under this program. The Canadian fleet
securitization program contains a tangible net worth covenant and DTG Canada was in compliance with
this covenant at December 31, 2007.
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