Hertz 2015 Annual Report Download - page 39

Table of Contents
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"Debt," to the Notes to our consolidated financial statements included in this Annual Report under the caption Item 8, "Financial Statements and
Supplementary Data."
Our ability to manage these risks depends on financial market conditions as well as our financial and operating performance, which, in turn, is
subject to a wide range of risks, including those described under “Risks Related to Our Business” included above in this Annual Report.
If our capital resources (including borrowings under our revolving credit facilities and access to other refinancing indebtedness) and operating cash
flows are not sufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to do, among other things, one or
more of the following: (i) sell certain of our assets; (ii) reduce the size of our rental fleet; (iii) reduce or delay capital expenditures; (iv) obtain
additional equity capital; (v) forgo business opportunities, including acquisitions and joint ventures; or (vi) restructure or refinance all or a portion of
our debt on or before maturity.
We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all.
Furthermore, we cannot assure you that we will maintain financing activities and cash flows sufficient to permit us to pay the principal, premium, if
any, and interest on our indebtedness. If we cannot refinance or otherwise pay our obligations as they mature and fund our liquidity needs, our
business, financial condition, results of operations, cash flows, liquidity, ability to obtain financing and ability to compete in our industry could be
materially adversely affected.
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We rely significantly on asset-backed and asset-based financing to purchase cars. If we are unable to refinance or replace our existing asset-
backed and asset-based financing or continue to finance new car acquisitions through asset- backed or asset-based financing on favorable terms,
on a timely basis, or at all, then our costs of financing could increase significantly and have a material adverse effect on our liquidity, interest
costs, financial condition, cash flows and results of operations.
Our asset-backed and asset-based financing capacity could be decreased, our financing costs and interest rates could be increased, or our future
access to the financial markets could be limited, as a result of risks and contingencies, many of which are beyond our control, including: (i) the
acceptance by credit markets of the structures and structural risks associated with our asset-backed and asset-based financing arrangements;
(ii) the credit ratings provided by credit rating agencies for our asset-backed indebtedness; (iii) third parties requiring changes in the terms and
structure of our asset-backed or asset-based financing arrangements, including increased credit enhancement or required cash collateral and/or
other liquid reserves; (iv) the insolvency or deterioration of the financial condition of one or more of our principal car manufacturers; or (v) changes
in laws or regulations, including judicial review of issues of first impression, that negatively impact any of our asset-backed or asset-based
financing arrangements.
Any reduction in the value of certain cars in our fleet could effectively increase our car fleet costs, adversely impact our profitability and potentially
lead to decreased borrowing base availability in our asset-backed and certain asset-based vehicle financing facilities due to the credit
enhancement requirements for such facilities, which could increase if market values for vehicles decrease below net book values for those
vehicles. In addition, if disposal of vehicles in the used vehicle marketplace were to become severely limited at a time when required collateral
levels were rising and as a result we failed to meet the minimum required collateral levels, the principal under our asset-backed and certain asset-
based financing arrangements may be required to be repaid sooner than anticipated with vehicle disposition proceeds and lease payments we
make to our special purpose financing subsidiaries. If that were to occur, the holders of our asset-backed and certain asset-based debt may have
the ability to exercise their right to direct the trustee or other secured party to foreclose on and sell vehicles to generate proceeds sufficient to
repay such debt.
The occurrence of certain events, including those described in the paragraph above, could result in the occurrence of an amortization event
pursuant to which the proceeds of sales of cars that collateralize the affected asset-backed financing arrangement would be required to be applied
to the payment of principal and interest on the affected facility or series, rather than being reinvested in our car rental fleet. In the case of our
asset-backed financing arrangements, certain other events, including defaults by us and our affiliates in the performance of covenants set forth in
the agreements governing certain fleet debt, could result in the occurrence of a liquidation event with the passing of time
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