Oct 1 - Standard & Poor's Ratings Services said today that it has assigned
its 'B' issue-level rating to HDTFS Inc.'s (related to Hertz Corp.) $600 million
senior notes due 2020 and $600 million senior notes due 2022, and then placed
both ratings on CreditWatch with negative implications. The recovery rating on
both issues is '5', indicating our expectation that lenders would receive modest
(10%-30%) recovery of principal in the event of a payment default. HDTFS is
issuing the notes, which will remain in escrow, in conjunction with Hertz's
proposed acquisition of Dollar Thrifty Automotive Group Inc. (DTAG).
After the consummation of Hertz's tender offer for DTAG's shares, the notes will
be released from escrow and Hertz will become issuer of the notes. Hertz Corp.
is the major operating subsidiary of Hertz Global Holdings Inc.
Our ratings on Hertz Corp. remain on CreditWatch, where we placed them with
negative implications on Aug. 27, 2012, after the company announced it had
entered into a definitive agreement to acquire competitor DTAG for $2.6
billion of cash and the assumption of $1.6 billion of DTAG's fleet debt. The
company will fund the acquisition through a combination of Hertz's cash,
DTAG's cash, and debt, for which Hertz has committed financing. It intends to
take out this financing with a $750 million add-on to its $1.4 billion term
loan that matures in 2018 and the $1.2 billion of proposed unsecured notes.
Hertz has stated it will divest its Advantage value brand, certain additional
assets, and DTAG airport concessions to obtain regulatory approval. Unless
there are additional material changes required to obtain regulatory approval,
we would expect to affirm the corporate credit rating and assign a stable
outlook upon the closing of the proposed transaction, which we expect to occur
by year end or possibly earlier.
RELATED CRITERIA AND RESEARCH
-- Use Of CreditWatch And Outlooks, Sept. 14, 2009
-- Criteria Guidelines For Recovery Ratings..., Aug. 10, 2009
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
Corporate credit rating B+/Watch Neg/--
$600 mil. notes due 2020 B/Watch Neg
Recovery rating 5
$600 mil. notes due 2022 B/Watch Neg
Recovery rating 5
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left