Thrifty Car Rental 2010 Annual Report Download - page 91

Under the Merger Agreement, in the event the Company enters into a definitive agreement with
respect to a “Company Takeover Transaction” (hereinafter defined) with a third party, including
Avis Budget, or the Board of Directors recommends a “Company Takeover Transaction” within
12 months of October 1, 2010, the Merger Agreement termination date, the Company could be
liable to Hertz for a termination fee of approximately $44.6 million, plus reimbursement of up to
$5 million of Hertz’s transaction expenses. A Company Takeover Transaction includes (i) a
proposal for the merger, consolidation, share exchange, business combination, reorganization,
recapitalization or similar transaction involving more than 50% of the assets of the Company and
its subsidiaries; (ii) the direct or indirect acquisition of assets or businesses representing 50% or
more of the assets of the Company and its subsidiaries, whether pursuant to an acquisition of
securities, assets or otherwise; or (iii) the acquisition of 50% or more of any class of the issued
and outstanding equity or voting securities of the Company.
Pending litigation relating to the now terminated Merger Agreement is described in Note 15 and
under Part I, Item 3 – Legal Proceedings.
19. SUBSEQUENT EVENTS
In preparing the consolidated financial statements, the Company has reviewed events that have
occurred after December 31, 2010 through the issuance of the financial statements. The
Company noted no reportable subsequent events other than the subsequent events noted
below.
On February 9, 2011, the Company and the requisite percentage of the lenders under the
Company’s Senior Secured Credit Facilities entered into an amendment (the “Amendment”),
which reinstated the Company’s ability to borrow under the Revolving Credit Facility at its
capacity of $231.3 million. Additionally, the Company is no longer required to maintain a
minimum adjusted tangible net worth of $150 million and a minimum of $100 million of cash and
cash equivalents. The Amendment replaced the foregoing covenants with a maximum leverage
ratio of 2.25 to 1.00 and a minimum interest coverage ratio of 2.00 to 1.00.
In addition, the Amendment removed certain limitations relating to the issuance of
enhancement letters of credit supporting asset-backed notes issued by RCFC. The Amendment
eliminated events of default resulting from amortization events under certain series of RCFC’s
outstanding asset-backed notes to the extent resulting from bankruptcy events with respect to
the related Monolines. The Amendment also removed restrictions on allocation of capital
spending to allow for certain franchise acquisitions and modified the language to permit
dividends and share repurchases.
On February 23, 2011, RCFC entered into amendments to the Series 2010-1 VFN, the Series
2010-2 VFN and the Series 2010-3 VFN (collectively, the “VFN Amendments”) which eliminated
the requirements to maintain a minimum of $100 million of cash and cash equivalents and a
minimum of $150 million in adjusted tangible net worth. The VFN Amendments replaced these
covenants with a maximum leverage ratio of 2.25 to 1.00 and a minimum interest coverage ratio
of 2.00 to 1.00, consistent with the terms of the Amendment.
On February 24, 2011, the Company announced that its Board of Directors had authorized a
share repurchase program providing for the repurchase of up to $100 million of the Company’s
common stock. The share repurchase program is discretionary and has no expiration date.
Subject to applicable law, the Company may repurchase shares directly in the open market, in
privately negotiated transactions, or pursuant to derivative instruments or plans complying with
SEC Rule 10b5-1, among other types of transactions and arrangements. Additionally, share
repurchases will be subject to applicable limitations under the Senior Secured Credit Facilities.
The share repurchase program may be suspended or discontinued at any time.
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