Avis Budget Group Announces Intention to Offer €400 Million of Senior Notes

Rhea-AI Summary

Avis Budget Group, Inc. announced a private offering of €400 million senior notes due 2029 by its subsidiary Avis Budget Finance plc. The Company plans to use the proceeds to redeem existing senior notes and for general corporate purposes.

Financial Analyst

The announcement by Avis Budget Group, Inc. regarding the issuance of €400 million in senior notes due 2029 represents a strategic financial maneuver aimed at restructuring the company's debt profile. From a financial analyst's perspective, this move is indicative of Avis Budget's proactive approach to managing its capital structure and liquidity. The decision to redeem the existing 4.750% senior notes due 2026 suggests an intent to take advantage of potentially lower interest rates or more favorable terms that could reduce the company's interest expenses and extend the maturity of its debt.

Investors should consider the implications of this debt issuance on the company's financial ratios, such as the debt-to-equity ratio and interest coverage ratio. The redemption of higher-interest debt and replacement with new notes could improve these ratios, signaling a stronger balance sheet. However, it's critical to scrutinize the terms of the new notes, including the interest rate, which has not been disclosed, as it will directly impact Avis Budget's cost of debt and, consequently, its net income and cash flows.

Market Research Analyst

From a market research perspective, the issuance of senior notes by Avis Budget Group is a reflection of the broader economic environment and the company's positioning within the car rental industry. The demand for such financial instruments is influenced by the prevailing interest rate environment, investor appetite for corporate debt and the perceived creditworthiness of the issuer. The use of proceeds for general corporate purposes, including the potential repayment of other indebtedness, indicates flexibility in strengthening the company's financial standing and potentially funding future growth initiatives.

It's essential to analyze the industry trends, such as the recovery of travel and tourism post-pandemic and the impact of such trends on Avis Budget's business. The ability to successfully issue new debt could be a testament to the market's confidence in the company's recovery trajectory and future prospects. Additionally, the private nature of the offering, targeting qualified institutional buyers, suggests a strategic approach to engaging with sophisticated investors who have a deep understanding of the risks and opportunities associated with corporate debt instruments.

Legal Expert

Legally, the private offering of senior notes by Avis Budget Group underscores the importance of compliance with securities regulations, such as Rule 144A and Regulation S under the Securities Act of 1933. These rules allow for the sale of securities to qualified institutional buyers without the need for a public offering, streamlining the process and potentially reducing the time and cost associated with issuing new debt. The fact that the notes and related guarantees will not be registered under the Securities Act and are not subject to its registration requirements is a significant legal consideration.

Investors should be aware that such unregistered securities are subject to transfer restrictions and may lack the liquidity of publicly traded securities. Furthermore, the absence of a public offering means less publicly available information, which could affect the ability of investors to make fully informed decisions. The company's adherence to these regulations is crucial in avoiding legal repercussions and ensuring a smooth transaction process.

PARSIPPANY, N.J., Feb. 20, 2024 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (NASDAQ: CAR) (the “Company”) announced today that its wholly-owned subsidiary, Avis Budget Finance plc (the “Issuer”), intends, subject to market and other customary conditions, to offer €400 million aggregate principal amount of senior notes due 2029 (the “Notes”) in a private offering. The Notes will be guaranteed on a senior unsecured basis by Avis Budget Group, Inc. and certain of its U.S. subsidiaries.

The Company intends to use the net proceeds from the Notes offering to redeem all of the Issuer’s outstanding 4.750% senior notes due 2026 and pay fees and expenses in connection with the foregoing, with the remainder to be used for general corporate purposes, which may include, without limitation, repayment of indebtedness.

This press release does not constitute a notice of redemption of the 4.750% senior notes due 2026.

The Notes and related guarantees are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or, outside the United States, to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act. The Notes and related guarantees have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

This press release is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. Any offers of the Notes will be made only by means of a private offering memorandum.

About Avis Budget Group
We are a leading global provider of mobility solutions, both through our Avis and Budget brands, which have approximately 10,250 rental locations in approximately 180 countries around the world, and through our Zipcar brand, which is the world's leading car sharing network. We operate most of our car rental offices in North America, Europe and Australasia directly, and operate primarily through licensees in other parts of the world. We are headquartered in Parsippany, N.J.

Forward-Looking Statements
Statements regarding the Notes offering and the expected use of proceeds therefrom are “forward-looking statements” and are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed in such forward-looking statements. These risks and uncertainties include, but are not limited to, the ability to complete the offering on favorable terms, if at all, and general market conditions which might affect the offering. Additional information concerning these and other important risks and uncertainties can be found in the Company's filings with the SEC, including under the captions “Forward-Looking Statements” and “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company undertakes no obligation to update any forward-looking statements to reflect subsequent events or circumstances.

Investor Relations Contact: David Calabria, IR@avisbudget.com

Media Relations Contract: James Tomlinson, ABGPress@edelman.com

What type of notes is Avis Budget Group offering in the private offering?

Avis Budget Group is offering €400 million aggregate principal amount of senior notes due 2029 in the private offering.

How does the Company plan to use the net proceeds from the Notes offering?

The Company intends to use the net proceeds to redeem all of the Issuer’s outstanding 4.750% senior notes due 2026 and pay fees and expenses, with the remainder for general corporate purposes.

Who will guarantee the Notes on a senior unsecured basis?

The Notes will be guaranteed on a senior unsecured basis by Avis Budget Group, Inc. and certain of its U.S. subsidiaries.

In what manner are the Notes and related guarantees being offered?

The Notes and related guarantees are being offered only to qualified institutional buyers under Rule 144A or to non-U.S. persons in compliance with Regulation S under the Securities Act.

Are the Notes and related guarantees registered under the Securities Act?

No, the Notes and related guarantees have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction.