Fitch Expects To Assign 'BB' IDR & 'BB-' Senior Unsecured to Avis.
Fitch expects to rate the following with a Stable Outlook:
-- Issuer Default Rating (IDR) 'BB';
-- $1.50 billion secured revolving credit facility due 2010 'BBB-';
-- $875 million secured term loan due 2011 'BBB-';
-- $1 billion senior unsecured notes due 2013 and 2015 'BB-';
ABC's rating strengths include the soundness of the company's dual brand strategy with the Avis oriented towards business travelers and the Budget brand targeted towards leisure travel, a leading market position in the worldwide general use car rental business, projected profitability and cash flow, and the strong track record of management through various economic cycles. On a combined basis, Avis holds the largest on-airport market share in the U.S., at over 32% based on most recent data.
Rating concerns center on the cyclicality and seasonality of the car and truck rental businesses, significant reliance on General Motors and Ford for vehicle supply, ABC's ability to pass on higher prices for new vehicle supply, execution and pace of growth in the off-airport network, and a significantly leveraged balance sheet that also is projected to reflect goodwill and intangibles equal to book equity.
In terms of the specific debt facilities, Fitch notched upward or downward from ABC's IDR based on the collateral and cash flow available to support each facility. In Fitch's view, ABC's low level of unencumbered assets results in the senior unsecured debt being notched down from the IDR.
Based in Parsippany, NJ, ABC is the one of the largest general use car rental companies in the world. ABC consists of two of the most recognized brands in the rental car industry, Avis and Budget. Avis is a leading supplier to the premium travel segment and Budget is considered a top value brand in the leisure segment. For 2005, ABC maintained an average fleet of 372,000 vehicles. Approximately 84% and 80% of the domestic Avis and Budget car rental revenues, respectively, were derived from airport locations in 2005.
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|Date:||Mar 17, 2006|
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