S&P Asgns BB- to Budget Grp Capital Trst's HIGH TIDES.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/5/98--Standard and Poor's today assigned its double-'B'-plus corporate credit rating to Budget Group Inc. and its double-'B'-minus rating to Budget Group Capital Trust's $300 million (six million shares) of remarketable term income deferrable equity securities (HIGH TIDES). The corporate credit rating reflects Budget's average market positions in its two major businesses -- car rentals and consumer truck rentals -- with strong cash flow and moderate debt leverage for a transportation equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
Budget was formed on April 29, 1997, when Team Rental Group Inc., Budget Rent-A-Car Corp.'s (BRACC BRACC Base Realignment and Closure Commission BRACC Black River Area Community Coalition (Ludlow, VT) ) largest franchisee, bought BRACC from Ford Motor Co. Budget, the third largest car rental company in the world, behind Hertz Corp. (triple-'B'-plus/Negative/A-2) and unrated Avis Inc., participates primarily in the business and leisure segment of the market and, to a much smaller extent, in the local/replacement segment. The business and leisure segment has typically been very price competitive and has produced poor margins or losses for all participants. However, the industry has enjoyed record profitability since ownership of major participants in this sector shifted from car manufacturers. Whereas car manufacturers viewed car rental companies primarily as captive customers, the new owners are fully or partly publicly held companies. Accordingly, they have thus far been more focused on profitability and less inclined to expand their fleets in a bid to gain market share, thereby allowing higher industry utilization and pricing. Budget's other major subsidiary is its consumer truck rental operation, which will be the second largest in the U.S. (but still half the size of industry leader U-Haul International Inc., the major operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of AMERCO (triple-'B'/Stable), after its pending acquisition of Ryder TRS See traffic engineering methods. TRS - term rewriting system Inc. (double-'B'/CreditWatch Developing) is completed. Budget's other operations include retail auto sales Auto Sales The major producers of domestic automobiles report sales monthly. These numbers are seasonally adjusted by the U.S. Department of Commerce and are available to the public one to five business days after the end of each month. , commuter van pools, and Cruise America, a recreational vehicle rental and sales company. Like other transportation equipment leasing companies, Budget has strong cash flow. Its debt to capital has been in the mid-80% range, average for a car rental company but high for a transportation equipment lessor. However, that ratio will decline to a more moderate mid-70% level as a result of issuance of the rated $300 million of HIGH TIDES, a form of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . OUTLOOK: STABLE Budget's credit measures are expected to improve with rising earnings and cash flow. However, any further improvement in its debt leverage will be constrained by heavy capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. .---CreditWire CONTACT: Betsy R Snyder, CFA (Computer Fraud and Abuse Act of 1986) Signed into law in 1986, the CFA was a significant step forward in criminalizing unauthorized access to computer systems and networks. The Act applies to "federal interest computers" that include any system used by the U.S. , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1585 Philip Baggaley, CFA, New York (1) 212-208-1309 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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