Thrifty Car Rental 2009 Annual Report Download - page 67

2007 Series notes are insured by Syncora Guarantee Inc., Ambac Assurance Corporation and
Financial Guaranty Insurance Company, respectively. An event of bankruptcy involving a Monoline
could trigger an early amortization of the Company’s obligations under the affected medium term
notes, which would require a more rapid repayment of those notes, and could also (subject to
certain conditions) result in cross-defaults under certain of the Company’s other financing
agreements. During an early amortization period, amortization is required at the earliest of (i) the
sale of the vehicle financed under the affected medium term note program, (ii) three years from the
original invoice date of that vehicle, or (iii) the final maturity date of such medium term notes.
In 2009, the Company executed amendments to its asset backed medium term notes to operate a
fleet comprised of 100% Non-Program Vehicles, while retaining the ability to purchase Program
Vehicles at its discretion to meet seasonal demand and allow flexibility in its defleeting cycle. The
Company further amended all series of its asset backed medium term notes to provide the Company
with the flexibility to manage its inventory by allowing re-designation of vehicles from the 2005
Series notes to the 2006 Series notes and 2007 Series notes given the scheduled maturity of the
2005 Series notes. In November 2009, the Company had fully utilized the $200 million re-
designation capacity. In relation to the amendments to the asset backed medium term notes, the
Company amended its Senior Secured Credit Facilities, whereby the Company may not increase the
available amount of the letters of credit issued as enhancement for the Company’s 2005 Series
notes at any time prior to the occurrence of an event of bankruptcy or insolvency event with respect
to Syncora Guarantee Inc. if, at any time, the aggregate amount of such letters of credit would
exceed $24.4 million.
The Company believes that conditions in the asset backed medium term note market have improved
during the last half of 2009. The Company intends to use a combination of cash on its balance
sheet and new vehicle financing to replace its asset backed medium term notes upon their maturity
or in the event of an early amortization.
The Company further amended all series of its asset backed medium term notes in order to add
Chrysler and General Motors Company as eligible vehicle manufacturers under the indenture
supplements. The related indenture supplements were also amended to cure any and all conditions
that may have been triggered as a result of the Chrysler bankruptcy and that could have constituted
a “Manufacturer Event of Default” as defined in the indenture supplements. In conjunction with this
amendment, the Company amended its Senior Secured Credit Facilities under which letters of credit
are issued as enhancement for the asset backed medium term notes. Under the terms of this
amendment, letters of credit to be issued as enhancement for future fleet financing will be limited to
a maximum of 7% of the initial face amount of each series of asset backed medium term notes
issued, up to the existing sub-limit under the facility of $100 million. This amendment does not apply
to, nor have any impact on, the Company’s existing medium term notes and enhancement letters of
credit. The Company is in compliance with these conditions at December 31, 2009.
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 – In February 2009, the Company paid in full the outstanding balance of its
Conduit Facility and terminated the facility in April 2009.
Commercial Paper and Liquidity Facility – In February 2009, the Company paid in full the
outstanding balance of its Commercial Paper Program, including its related Liquidity Facility. The
Company terminated the program in April 2009.
Other Vehicle Debt – In 2009, the Company paid in full the outstanding balance under its vehicle
manufacturer line of credit and its remaining bank lines of credit.
Limited Partner Interest in Limited Partnership – DTG Canada has a partnership agreement (the
“Partnership Agreement”) with an unrelated bank’s conduit (the “Limited Partner”). This transaction
included the creation of a limited partnership (TCL Funding Limited Partnership, the “Partnership”).
DTG Canada is the General Partner of the Partnership. The purpose of the Partnership is to
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