ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 22, 2016, The Hertz Corporation (“
Hertz
”), a wholly owned subsidiary of Hertz Global Holdings, Inc. (“
Hertz Global
”), issued $800 million aggregate principal amount of 5.50% Senior Notes due 2024 (the “
U.S. Notes
”) under an indenture dated September 22, 2016 (as amended, supplemented (including pursuant to that certain supplemental indenture dated September 22, 2016), waived or otherwise modified), by and among Hertz, certain U.S. subsidiaries of Hertz as guarantors (the “
U.S. Subsidiary Guarantors
”) and Wells Fargo Bank, National Association as trustee (the “
U.S. Indenture
”). The following is a brief description of the U.S. Indenture and the terms of the U.S. Notes issued thereunder.
Interest; Maturity
The U.S. Notes will mature on October 15, 2024. The U.S. Notes bear interest at a rate per annum of 5.50% from September 22, 2016. Interest is payable semi-annually on April 15 and October 15 of each year, commencing April 15, 2017.
Ranking; Guarantees
The U.S. Notes will be Hertz’s senior unsecured obligations and will rank:
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equal in right of payment to all of Hertz’s existing and future unsecured indebtedness and other obligations that are not, by their terms, expressly subordinated in right of payment to the U.S. Notes;
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senior in right of payment to any of Hertz’s existing or future indebtedness and other obligations that are, by their terms, expressly subordinated in right of payment to the U.S. Notes; and
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effectively subordinated to all of Hertz’s secured indebtedness and other secured obligations, including Hertz’s senior secured term facility and senior secured revolving credit facility, to the extent of the value of the assets securing such secured indebtedness or other secured obligations, and structurally subordinated to all indebtedness and other obligations of Hertz’s subsidiaries (other than subsidiaries that are, or which become, guarantors).
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The U.S. Notes are guaranteed by the U.S. Subsidiary Guarantors. The U.S. Subsidiary Guarantors are the same subsidiaries that guarantee Hertz’s senior secured revolving credit facility (currently, Dollar Rent A Car, Inc., Dollar Thrifty Automotive Group, Inc., Donlen Corporation, DTG Operations, Inc., DTG Supply, LLC, Firefly Rent A Car LLC, HCM Marketing Corporation, Hertz Car Sales LLC, Hertz Claim Management Corporation, Hertz Global Services Corporation, Hertz Local Edition Corp, Hertz Local Edition Transporting, Inc., Hertz System, Inc., Hertz Technologies, Inc., Hertz Transporting, Inc., Rental Car Group Company, LLC., Smartz Vehicle Rental Corporation, Thrifty Car Sales, Inc., Thrifty, LLC, Thrifty Insurance Agency, Inc., Thrifty Rent-A-Car System, LLC, and TRAC Asia Pacific, Inc.).
The guarantees of each guarantor in respect of the U.S. Notes will be:
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equal in right of payment to all existing and future indebtedness and other obligations of that guarantor that are not, by their terms, expressly subordinated in right of payment to the guarantee by such guarantor of the U.S. Notes;
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senior in right of payment to any existing and future indebtedness and other obligations of that guarantor that are, by their terms, expressly subordinated in right of payment to the guarantee by such guarantor of the U.S. Notes; and
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effectively subordinated to all secured indebtedness and other secured obligations of that guarantor and its subsidiaries, including pursuant to Hertz’s senior secured term facility and senior secured revolving credit facility, to the extent of the value of the assets securing such indebtedness and other obligations, and structurally subordinated to all indebtedness and other obligations of the subsidiaries of such guarantor (other than subsidiaries that are, or which become, guarantors).
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Optional Redemption
Prior to October 15, 2019, Hertz will be entitled at its option to redeem all or a portion of the U.S. Notes at a redemption price equal to 100% of the principal amount of the U.S. Notes plus an applicable “make whole” premium and accrued and unpaid interest to the redemption date.
On or after October 15, 2019, Hertz will be entitled at its option to redeem all or a portion of the U.S. Notes at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date.
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Redemption Period
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Price
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2019
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104.125
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%
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2020
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102.750
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%
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2021
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101.375
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%
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2022 and thereafter
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100.000
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%
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On or prior to October 15, 2019, Hertz will be entitled at its option, on one or more occasions, to redeem the U.S. Notes in an aggregate principal amount equal to up to 40% of the aggregate principal amount of the U.S. Notes issued under the U.S. Indenture with the net cash proceeds from certain equity offerings at a redemption price equal to 105.50% of the principal amount outstanding in respect of the U.S. Notes, plus accrued and unpaid interest, if any, to the redemption date.
In connection with any tender offer pursuant to which 90% of the outstanding U.S. Notes are validly tendered and not withdrawn, Hertz may, subject to certain additional conditions, redeem all of the remaining U.S. Notes outstanding following such tender offer at a price in cash equal to the price offered to each holder in such tender offer, plus, to the extent not included in the tender offer payment, accrued and unpaid interest, if any, to but not including the date of redemption.
Change of Control
Upon the occurrence of a Change of Control Triggering Event (as defined in the U.S. Indenture), each holder of U.S. Notes will have the right to require Hertz to repurchase all or any part of the U.S. Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.
Covenants
The U.S. Indenture contains covenants that, among other things, will limit the ability of Hertz and its restricted subsidiaries, described in the U.S. Indenture, to make certain restricted payments; create encumbrances or restrictions on the ability of Hertz’s subsidiaries to pay dividends or make other payments to it; lease, transfer or sell certain assets; create or incur liens; and merge or consolidate with other entities. These covenants are subject to important exceptions and qualifications, which are described in the U.S. Indenture.
Events of Default
The U.S. Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and other monetary obligations on all the then outstanding U.S. Notes issued under the U.S. Indenture to be due and payable immediately.