Thrifty Car Rental 2009 Annual Report Download - page 68

facilitate financing of Canadian vehicles. The Partnership Agreement of the Partnership expires on
May 31, 2010. Due to a 2009 amendment, the Limited Partner is committed to funding CAD$125.0
million (approximately US$118.9 million at December 31, 2009), which is funded through issuance
and sale of notes in the Canadian commercial paper market. This amendment also established a
final reduction in January 2010 to CAD$100 million, which will remain in effect until the partnership
agreement expires on May 31, 2010. DTG Canada is working on a new financing facility to replace
this facility prior to its maturity.
DTG Canada, as General Partner, is allocated the remainder of the Partnership net income after
distribution of the income share of the Limited Partner. The income share of the Limited Partner,
which amounted to $1.4 million, $5.4 million and $7.8 million for the years ended December 31,
2009, 2008 and 2007, respectively, is included in interest expense. Due to the nature of the
relationship between DTG Canada and the Partnership, the accounts of the Partnership are
appropriately consolidated with the Company. The Partnership Agreement requires the maintenance
of certain letters of credit and contains various restrictive covenants, including a tangible net worth
covenant. DTG Canada was in compliance with all such covenants and requirements at December
31, 2009.
Senior Secured Credit Facilities – On June 15, 2007, the Company entered into the senior
secured credit facilities (as amended, the “Senior Secured Credit Facilities”) initially comprised of a
$350.0 million revolving credit facility (the “Revolving Credit Facility”) and a $250.0 million term loan
(the “Term Loan”). However, throughout 2008, Company entered into three separate amendments
to the Senior Secured Credit Facilities primarily to modify certain terms relating to the leverage ratio
test. In order to facilitate such amendments, the Company agreed to reductions in capacity on the
Revolving Credit Facility to $340 million and paid the Term Loan down to $178.1 million. The Senior
Secured Credit Facilities contain certain other covenants, including annual limitations on non-vehicle
capital expenditures, and a prohibition against cash dividends and share repurchases, and are
collateralized by a first priority lien on substantially all material non-vehicle assets of the Company.
The Term Loan bears interest at LIBOR plus 2.5% at December 31, 2009 and LIBOR plus 2.0% at
December 31, 2008, which was 2.73% and 2.46% at December 31, 2009 and 2008, respectively.
As of December 31, 2009, the Company is in compliance with all covenants.
In February 2009, the Company amended the Senior Secured Credit Facilities through the term in
June 2013, replacing the leverage ratio test with two new covenants comprised of a minimum
adjusted tangible net worth of $150 million and a minimum unrestricted cash and cash equivalents
of $100 million.
In order to facilitate such amendments, the Company agreed to reductions in capacity on the
Revolving Credit Facility to $231.3 million and paid the Term Loan down to $158.1 million. Within
the $100 million of unrestricted cash and cash equivalents, the Company must also maintain at least
$60 million in separate accounts with the Collateral Agent to secure payment of amounts
outstanding under the Term Loan and letters of credit issued under the Revolving Credit Facility.
Additionally, the Company agreed to a 50 basis point increase in the interest rate on its Term Loan
and its letter of credit fee, executed liens in favor of the banks encumbering seven additional
properties not previously encumbered as well as certain vehicles not pledged as collateral under
another vehicle financing facility, and will be required to make minimum quarterly principal payments
of $2.5 million per quarter beginning in March 2010.
The Revolving Credit Facility is restricted to use for letters of credit as no revolving credit borrowings
are permitted under the amended facility. The Revolving Credit Facility also contains sub-limits that
limit the amount of capacity available for letters of credit to be used as vehicle enhancement in both
its Canadian and U.S. operations. As of December 31, 2009, the Company was required to pay a
0.375% commitment fee on the unused available line, a 2.50% letter of credit fee on the aggregate
amount of outstanding letters of credit and a 0.125% letter of credit issuance fee. The Company
had letters of credit of approximately $141.6 million and $312.8 million outstanding under the
Revolving Credit Facility at December 31, 2009 and 2008, respectively. Additionally, in connection
with the amendment, the Company expensed approximately $1.0 million of unamortized deferred
financing costs as a result of the extinguishment of debt in the first quarter of 2009.
67