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Fitch Expects To Assign 'BB' IDR & 'BB-' Senior Unsecured to Avis.

CHICAGO -- Fitch Ratings expects to assign a 'BB' Issuer Default Rating (IDR) and a 'BB-' senior unsecured debt rating to Avis Budget Rental Car, LLC (ABC) in connection with Cendant Corp.'s (Cendant) decision to split itself into four publicly traded companies through share stock dividends of existing companies. From a legal perspective, Avis Budget Group, the ultimate parent company of ABC, will be the surviving corporate entity of Cendant. The split is expected to be completed by October 2006. Fitch expects the effective spin-off from Cendant will not result in any significant changes to the key elements of ABC's existing strategic plan or management.

Fitch expects to rate the following with a Stable Outlook:

ABC

-- 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.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:Mar 17, 2006
Words:492
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