TEXT-Fitch: Avis' ratings unaffected by Zipcar announcement

Mon Jan 7, 2013 1:36pm EST

Jan 7 - Fitch Ratings believes there is no impact on the ratings of Avis
Budget Group, Inc. (ABG) and its debt-issuing subsidiary Avis Budget Car
Rental, LLC following ABG's announcement on Jan. 2, 2013 of its intent to
acquire the outstanding shares of Zipcar, Inc. (ZIP) for $12.25 per
share, totaling approximately $500 million. A complete list of ratings appears
at the bottom of this release.

ABG has agreed to acquire ZIP, a leading car-sharing network, representing a
transaction value totaling approximately $500 million. ABG intends to finance
the purchase price primarily through incremental corporate debt borrowings. The
combination is expected to produce $50 million to $70 million in annual
synergies through lowering fleet costs, increasing utilization across the two
companies, and increased incremental revenues, which Fitch believes is
achievable given ABG's track record of managing operating leverage. The
acquisition is subject to approval by regulators and ZIP shareholders, and is
expected to be completed in the spring of 2013.

Fitch views the ZIP acquisition to be neutral to ABG's current ratings, as the
transaction is not expected to result in a significant increase in cash flow
leverage. On a pro forma basis, corporate debt-to-annualized adjusted EBITDA,
assuming $60 million of potential synergies, would increase approximately a
quarter turn from 3.6x to 3.9x as of Sept. 30, 2012. Net of cash, leverage is
expected to rise from 2.9x to 3.2x, which remains within ABG's articulated
leverage target of between 3x and 4x.

Fitch believes the acquisition is strategically complementary, as it expands
ABG's current daily and weekly car rentals to include ZIP's hourly product
offerings. In addition, Fitch expects ABG's standalone near-term operating
performance will improve, given the continued strength of the used vehicle
market and the company's efforts to optimize fleet utilization and operating
efficiencies.

RATING DRIVERS AND SENSITIVITIES

Positive rating actions would be driven by ABG's ability to sustain improvements
in operating leverage and liquidity, maintain appropriate capitalization and
economic access to funding in the capital markets, and its ability to achieve
proposed synergies and manage expected integration costs. Fitch would also view
positively ABG's ability to manage net leverage, as measured by net corporate
debt-to-adjusted EBITDA below its articulated range in the longer term.

Conversely, negative rating actions could result from a material deterioration
in revenue and cash flow generation resulting from declines in passenger
volumes, rental rates and used car values which impair ABG's access to funding,
liquidity, and/or capitalization. A meaningful and sustained increase in net
leverage over and above ABG's articulated range could also yield negative rating
actions.

Fitch currently has the following ratings:

Avis Budget Group, Inc.
--Long-term Issuer Default Rating (IDR) 'B+'.

Avis Budget Car Rental, LLC
--Long-term IDR 'B+';
--Secured term loan 'BB+/RR1';
--Senior secured debt 'BB+/RR1';
--Senior unsecured debt 'B+/RR4'.

The Rating Outlook is Positive.


Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012)
--'Recovery Ratings for Financial Institutions' (Aug. 15, 2012)
--'Finance & Leasing Companies Criteria' (Dec. 11, 2012).

Applicable Criteria and Related Research:
Finance and Leasing Companies Criteria
Recovery Ratings for Financial Institutions
Global Financial Institutions Rating Criteria
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