Thrifty Car Rental 2008 Annual Report Download - page 67

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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 insured by Monolines and each contains a
minimum net worth condition and an interest coverage condition. In 2008, the Company executed
amendments to its asset backed medium term notes which amended the minimum net worth
condition in three of its four Monoline agreements to exclude the impact of any goodwill or other
intangible asset impairment, and increased the level of Non-Program Vehicles allowed to be
financed to 75%, allowing the Company to continue its efforts to increase the level of Non-Program
Vehicles in its fleet. The Company provided increased enhancement for the one Monoline
agreement not amended in order to comply with the existing minimum net worth condition. An
insolvency or bankruptcy of any of these Monolines could trigger an amortization of the debt
obligation. Amortization under the facilities is required at the earlier of the sale date of the vehicle
financed under the facility, or three years from the original invoice date of that vehicle. The Company
is in compliance with these conditions at December 31, 2008.
The asset backed medium term notes mature from 2010 through 2012 and are generally subject to
repurchase by the Company on any payment date subject to a prepayment penalty.
Conduit Facility – On May 8, 2008, the Company renewed its Variable Funding Note Purchase
Facility (the “Conduit Facility”) for another 364-day period with a capacity of $215.0 million.
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
(4.62% and 5.86% at December 31, 2008 and 2007, respectively). The Company had $215.0
million and $12.0 million outstanding under the Conduit at December 31, 2008 and 2007,
respectively. In February 2009, the Conduit Facility was paid in full.
In conjunction with the Conduit Facility renewal, the Company modified the minimum net worth
condition to exclude the impact of any goodwill or other intangible asset impairment, and increased
the percentage of Non-Program Vehicles allowed. Additionally, a covenant was added to maintain a
minimum level of excess liquidity. The renewal resulted in higher fees and requires increased
enhancement levels to be maintained by the Company. The Company is in compliance with these
covenants at December 31, 2008.
Commercial Paper and Liquidity Facility – On May 8, 2008, the Company renewed its
Commercial Paper Program (the “Commercial Paper Program”) for another 364-day period at a
maximum capacity of $800.0 million supported by a 364-day extension of the Liquidity Facility (the
“Liquidity Facility”) in the amount of $278.0 million. At any time, the Company may only issue
commercial paper in an amount that does not exceed the sum of the Liquidity Facility and the letter
of credit supporting the commercial paper notes. 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. In conjunction with this renewal, the
Company modified the minimum net worth covenant to exclude the impact of any goodwill or other
intangible asset impairment, and increased the percentage of Non-Program Vehicles allowed.
Additionally, a covenant was added to maintain a minimum level of excess liquidity. The renewal
resulted in higher fees and requires increased enhancement levels to be maintained by the
Company.
On September 23, 2008, the Company began borrowing under the Liquidity Facility. This borrowing
under the Liquidity Facility resulted from the inability to sell maturing commercial paper due to a
general disruption in the commercial paper markets due to instability in the global financial markets.
The draws on this facility were used to pay down maturing commercial paper. The Liquidity Facility
bears interest at prime which was 3.25% at December 31, 2008, while commercial paper rates
ranged from 4.95% to 5.32% at December 31, 2007. At December 31, 2008, amounts outstanding
were under the Liquidity Facility and totaled $274.9 million, which was paid in full in February 2009.
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