Avis 2013 Annual Report Download - page 42

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32
• provide guarantees in respect of obligations of other persons;
• pay dividends or distributions, redeem or repurchase capital stock;
• prepay, redeem or repurchase debt;
• create or incur liens;
• make distributions from our subsidiaries;
• sell assets and capital stock of our subsidiaries;
• consolidate or merge with or into, or sell substantially all of our assets to, another person; and
• respond to adverse changes in general economic, industry and competitive conditions, as well as
changes in government regulation and changes to our business.
Our failure to comply with the restrictive covenants contained in the agreements or instruments that govern our
debt obligations, if not waived, would cause a default under the senior credit facility and could result in a cross-
default under several of our other debt agreements including our U.S. and European asset-backed debt facilities.
If such a failure were to occur, certain provisions in our various debt agreements could require that we repay or
accelerate debt payments to the lenders or holders of our debt and there can be no assurance that we would be
able to refinance or obtain a replacement for such financing programs.
We face risks related to movements or disruptions in the credit and asset-backed securities markets.
We finance our operations through the use of asset-backed securities and other debt financing structures
available through the credit market. Our total asset-backed debt as of December 31, 2013, was approximately
$7.3 billion, with remaining available capacity of approximately $3.5 billion. We maintain asset-backed facilities in
the United States, Canada, Australia and Europe. If the asset-backed financing market were to be disrupted for
any reason, we may be unable to obtain refinancing for our operations at current levels, or at all, when our asset-
backed financings mature. Likewise, any disruption of the asset-backed financing market could also increase our
borrowing costs, as we seek to engage in new financings or refinance our existing asset-backed financings. In
addition, we could be subject to increased collateral requirements to the extent that we request any amendment
or renewal of any of our existing asset-backed financings.
We face risks related to potential increases in interest rates.
A portion of our borrowings, primarily our vehicle-backed borrowings, bears interest at variable rates that expose
us to interest rate risk. If interest rates were to increase, whether due to an increase in market interest rates or an
increase in our own cost of borrowing, our debt service obligations for our variable rate indebtedness would
increase even though the amount of borrowings remained the same, and our results of operations could be
adversely affected. As of December 31, 2013, our total outstanding debt of approximately $10.7 billion included
unhedged interest rate sensitive debt of approximately $1.9 billion. During our seasonal borrowing peak in 2013,
outstanding unhedged interest rate sensitive debt totaled approximately $4.3 billion.
Approximately $600 million of our corporate indebtedness as of December 31, 2013, and virtually all of our $7.3
billion of debt under vehicle programs, matures within the next five years. If we are unable to refinance maturing
indebtedness at interest rates that are equivalent to or lower than the interest rates on our maturing debt, our
results of operations or our financial condition may be adversely affected.