Avis Budget Group Announces Pricing of €200 Million of Senior Notes
Avis Budget Group announced the pricing of €200 million in additional 7.25% Senior Notes due 2030 through its subsidiary, Avis Budget Finance. These Notes will be added to the €400 million previously issued under the same terms. Priced at 100.25% of face value, the offering will close on May 21, 2024, pending standard conditions. Proceeds will be used for general corporate purposes, including debt repayment. The Notes are offered only to qualified institutional buyers under Rule 144A of the Securities Act and will not be registered in the U.S. This announcement does not constitute an offer to sell or buy any securities.
- Priced at 100.25% of face value, showing investor confidence.
- Proceeds can be used for corporate debt repayment, potentially improving financial stability.
- Guaranteed on a senior unsecured basis by the Company and certain U.S. subsidiaries, enhancing credibility.
- Issuance of additional debt may increase financial burden if not managed properly.
- High-interest rate of 7.25% could lead to substantial interest expenses.
- Private offering limits investor participation to qualified institutional buyers, restricting liquidity.
Insights
Financial Analyst Perspective
Avis Budget Group's issuance of
The use of proceeds for general corporate purposes, including paying off existing debt, indicates a strategic move to manage their debt profile. This decision could help in reducing the overall cost of capital if the new debts are used to pay off higher-interest obligations. For retail investors, it is essential to watch the company's debt-to-equity ratio and interest coverage ratio following this issuance to assess the sustainability of its financial obligations.
In the short term, the issuance might lead to a slight increase in leverage, but if managed well, it could stabilize the company's debt structure. Long-term investors should consider the impact of consistent high-interest payments on the company's profitability and margin.
Market Research Analyst Insight
The car rental industry has faced substantial volatility, particularly in the wake of global economic fluctuations and changing travel patterns. Avis Budget Group's move to secure additional funding through the issuance of notes can be interpreted as a bid to ensure liquidity and operational flexibility. This can be advantageous, allowing the company to respond swiftly to market opportunities or challenges.
However, investors should be wary of the broader market conditions affecting the car rental sector. Factors such as fuel prices, travel demand and economic conditions would significantly impact Avis Budget Group's performance. The use of the raised funds to potentially pay off fleet debt indicates a focus on asset management, showing a commitment to maintaining operational efficiency.
Retail investors should note the external market risks while evaluating the company's internal strategies. The ability of Avis Budget Group to leverage this capital to gain a competitive edge or stabilize operations is a critical point to observe.
Credit Risk Analyst Considerations
The issuance of additional senior notes at 7.25% suggests that Avis Budget Group is navigating a high-interest environment. This may reflect current market conditions or the company's creditworthiness. The decision to price the notes at 100.25% of their face value is slightly above par, indicating slight investor confidence despite the high coupon.
From a credit risk perspective, the guarantee on a senior unsecured basis by the company and certain U.S. subsidiaries offers some security to investors. However, the high-interest obligations will add pressure on the company's cash flows, which could be a concern if their revenue generation does not align with expectations.
Investors should track the company's credit ratings and any changes therein as these will reflect the market's view on the company's credit risk. Additionally, monitoring the impact of this new debt on the company's overall leverage and interest coverage ratios will be important in evaluating credit risk over the medium to long term.
PARSIPPANY, N.J., May 14, 2024 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (NASDAQ: CAR) (the “Company”) announced today that its wholly-owned subsidiary, Avis Budget Finance plc (the “Issuer”), priced a private offering of
The Company intends to use the proceeds from the offering of the Notes for general corporate purposes, which may include repayment of indebtedness, including, without limitation, outstanding fleet debt, and to pay fees and expenses in connection with the foregoing.
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 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024. 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 Contact: James Tomlinson, ABGPress@edelman.com |
FAQ
When did Avis Budget Group announce the pricing of the additional €200 million Senior Notes?
What is the maturity date for the newly issued 7.25% Senior Notes by Avis Budget Group?
What will Avis Budget Group use the proceeds from the €200 million Notes offering for?
At what price were the additional €200 million Senior Notes issued?
Who are the intended buyers for Avis Budget Group's €200 million Senior Notes?
Will the €200 million Senior Notes be registered under the U.S. Securities Act?
