Thrifty Car Rental 2007 Annual Report Download - page 69

The 2005 Series notes are comprised of $110 million 4.59% fixed rate notes and $290 million of
floating rate notes. In conjunction with the issuance of the 2005 Series notes, the Company also
entered into interest rate swap agreements (Note 11) to convert $190 million of the floating rate debt
to fixed rate debt at a 4.58% interest rate. Additionally, in December 2006, the Company entered
into an interest rate swap agreement to convert the remaining $100 million of the floating rate debt
to fixed rate debt at a 5.09% interest rate.
The 2004 Series notes are floating rate notes that were converted to a fixed rate of 4.20% by
entering into interest rate swap agreements (Note 11) in conjunction with the issuance of the notes.
The 2003 Series notes are floating rate notes that were converted to a fixed rate of 3.64% by
entering into an interest rate swap agreement (Note 11) in conjunction with the issuance of the
notes. During 2007, the 2003 Series notes were paid in full.
The assets of RCFC, including revenue-earning vehicles related to the asset backed medium term
notes, restricted cash and investments, and certain receivables related to revenue-earning vehicles
are available to satisfy the claims of its creditors. Dollar and Thrifty lease vehicles from RCFC under
the terms of a master lease and servicing agreement. The asset backed medium term note
indentures also provide for additional credit enhancement through over collateralization of the
vehicle fleet, cash or letters of credit and maintenance of a liquidity reserve. RCFC is in compliance
with the terms of the indentures.
The asset backed medium term note programs are covered by bond insurers (the “Monolines”) and
each contain a minimum net worth covenant and an interest coverage covenant. 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.
The asset backed medium term notes mature from 2008 through 2012 and are generally subject to
repurchase by the Company on any payment date subject to a prepayment penalty.
Conduit Facility – On June 25, 2007, the asset backed Variable Funding Note Purchase Facility
(the “Conduit”) was renewed for another 364-day period at a capacity of $300,000,000. Proceeds
are used for financing of vehicle purchases and for periodic refinancing of asset backed notes. The
Conduit generally bears interest at market-based commercial paper rates (5.86% and 5.72% at
December 31, 2007 and 2006, respectively). The Company had $12,000,000 and $425,000,000
outstanding under the Conduit at December 31, 2007 and 2006, respectively.
The Conduit 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 to exclude the impact
of any potential goodwill write-down.
Commercial Paper – On June 25, 2007, the commercial paper program (the “Commercial Paper
Program”), representing $545,000,000 of borrowing capacity as a part of the existing asset backed
note program, was renewed for another 364-day period. Concurrently with the establishment of the
Commercial Paper Program, DTFC also entered into a 364-day, $460,000,000 liquidity facility (the
“Liquidity Facility”) to support the Commercial Paper Program. Proceeds are used for financing of
vehicle purchases and for periodic refinancing of asset backed notes. The Liquidity Facility provides
the Commercial Paper Program with an alternative source of funding if DTFC is unable to refinance
maturing commercial paper by issuing new commercial paper. Commercial paper bears interest at
rates ranging from 4.95% to 5.32% at December 31, 2007 and 5.33% to 5.38% at December 31,
2006 and matured within 30 days of December 31, 2007.
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.
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