Thrifty Car Rental 2010 Annual Report Download - page 72

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.
On October 25, 2010, FGIC indicated that it had not received sufficient participation in its offer
to exchange certain residential mortgage-backed securities and asset-backed securities insured
by it, and that, consequently, FGIC had not satisfied the conditions for successfully effectuating
its surplus restoration plan as required by the New York State Insurance Department (“NYID”).
On December 2, 2010, holders of securities guaranteed by FGIC announced that they had
formed a committee of policyholders to negotiate a proposed restructuring plan, with the goal of
reinstating FGIC’s ability to satisfy policyholder claims in 2011. As of February 28, 2011, a
restructuring has not yet been completed, and the NYID has taken no further public action with
respect to FGIC. The NYID may at any time seek an order of rehabilitation or liquidation of
FGIC, which could result, immediately or after a period of time, in an event of bankruptcy with
respect to FGIC under the terms of the Series 2007-1 notes, depending on the circumstances.
AMBAC and its parent company have been subject to or undertaken several restructuring
actions, including the filing of a Chapter 11 bankruptcy by the parent company on November 8,
2010. In March 2010, AMBAC was required to establish a segregated account of policies by
the Office of the Commissioner of Insurance of the State of Wisconsin (the “OCIW”), although it
has been continuing operations and paying claims in the ordinary course on policy obligations
that were not included in that account. Our Series 2006-1 notes were not included in the
segregated account, although there is no assurance that the OCIW will not take further action
with respect to the instruments not included in the segregated account. Any such action could
result in a rapid amortization under the notes. Although the Series 2006-1 notes are insured by
AMBAC and could potentially be subject to a rapid amortization event in the event of an insurer-
related default, those notes began scheduled amortization in December of 2010, and as of
February 28, 2011 $300 million in principal amount of these notes has been repaid, with the
remaining amount due in equal installments through May 2011. Accordingly, the period during
which the consequence of any future rapid amortization event would occur would generally
overlap with the scheduled amortization period.
Asset-Backed Variable Funding Notes - During 2010, the Company added $950 million of
U.S. fleet financing capacity, of which $750 million is intended to provide a funding source for
future debt maturities, including any future rapid amortization event that would occur as a result
of an event of bankruptcy with respect to a Monoline.
In April 2010, RCFC completed a $200 million asset-backed variable funding note program (the
“Series 2010-1 VFN”) which may be repaid and redrawn in whole or in part at any time during
the Series 2010-1 VFN’s two-year revolving period. Upon issuance and at December 31, 2010,
the Series 2010-1 VFN was fully drawn at $200 million. At the end of the revolving period, the
then-outstanding principal amount of the Series 2010-1 VFN will be repaid monthly over a six-
month period, beginning in April 2012, with the final payment in September 2012. The Series
2010-1 VFN bears interest at a spread of 275 basis points above the weighted-average
commercial paper rate offered by the commercial paper conduit purchaser or purchasers from
time to time funding advances under the Series 2010-1 VFN, or at 475 basis points over the
affiliated bank’s base rate or a Eurodollar rate in the event that the conduit purchaser is not at
such time funding amounts outstanding under the Series 2010-1 VFN. The Series 2010-1 VFN
had an interest rate of 3.06% at December 31, 2010. The Series 2010-1 VFN has a facility fee
commitment rate of up to 1.5% per annum on any unused portion of the facility. In connection
with this financing, RCFC entered into an interest rate cap agreement for a term of 30 months
with a notional amount of $200 million to effectively limit the Series 2010-1 VFN’s floating rate
to a maximum of 5%.
In June 2010, RCFC completed a $300 million asset-backed variable funding note program (the
“Series 2010-2 VFN”), which may be drawn and repaid from time to time in whole or in part at
any time during the Series 2010-2 VFN’s three-year revolving period. The Series 2010-2 VFN
was undrawn at December 31, 2010. At the end of the revolving period, the then-outstanding
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