Avis 2009 Annual Report Download - page 92

Table of Contents
Long-term debt consisted of:
AVIS BUDGET GROUP, INC. CORPORATE DEBT
3 /
2 % Convertible Senior Notes
The Company’s 3 /
2 % Convertible Senior Notes due 2014 (the “Convertible Notes”) were issued in October 2009 at 100% of their face
value for aggregate proceeds of $345 million. The Convertible Notes are general unsecured senior obligations of the Company. The
Convertible Notes are not redeemable by the Company prior to maturity; however, they are convertible by the holders at any time prior to
the second trading day before the maturity date of the Convertible Notes. The initial conversion rate for the Convertible Notes is 61.5385
shares of common stock per $1,000 principal amount, which is equal to an initial conversion price of approximately $16.25 per share. The
Convertible Notes mature October 1, 2014.
Holders may require the Company to repurchase, for cash, all or part of the Convertible Notes upon a “fundamental change”, as defined
under the indenture, at a price equal to 100% of the principal amount of the Convertible Notes being repurchased plus any accrued and
unpaid interest. In addition, upon a “make-whole fundamental change”, prior to the maturity date of the Convertible Notes, the Company
may, in some cases, increase the conversion rate for a holder that elects to convert its notes in connection with such make-whole
fundamental change. Under these “make-whole”
provisions the Company could be required to issue an additional 6.4 million shares to settle
the Convertible Notes. The Company has designated 27.6 million shares (including the shares that could be issued under the “make-whole”
provisions) which it can issue to settle its obligation upon conversion.
Concurrently with the issuance of the Convertible Notes, the Company purchased a convertible note hedge and entered into a warrant
transaction, which effectively increased the conversion price of the Convertible Notes, from the Company’
s perspective, to $22.50 per share.
The convertible note hedge is intended to reduce the net number of shares required to be issued upon conversion of the Convertible Notes.
The significant terms of the convertible note hedge and warrant transactions can be found in Note 20—Stockholders’ Equity.
F
-
30
17.
Long
-
term Debt and Borrowing Arrangements
Maturity
Date
As of
December 31,
2009
As of
December 31,
2008
Floating rate term loan
April 2012
$
778
$
787
Floating rate notes
May 2014
250
250
7
/
8
% notes
May 2014
375
375
3
/
2
% convertible notes
October 2014
345
-
7
/
4
% notes
May 2016
375
375
2,123
1,787
Other
8
2
Total long
-
term debt
2,131
1,789
Less: Current portion
12
10
Long
-
term debt
$
2,119
$
1,779
The floating rate term loan and our revolving credit facility are secured by pledges of all of the capital stock of all of the Company
’
s
direct or indirect domestic subsidiaries and up to 66% of the capital stock of each direct foreign subsidiary, subject to certain
exceptions, and liens on substantially all of the Company
’
s intellectual property and certain other real and personal property.
(a)
5
1
3
(a)
1
1