Fitch puts Avis on evolving watch

Fitch Ratings said it placed the ratings of Avis Budget Group, Inc. on Rating Watch evolving, including its B+ long-term issuer default rating and Avis Budget Car Rental, LLC's B+ long-term issuer default rating, BB-/RR3 senior secured debt and B-/RR6 senior unsecured debt.

The Rating Watch follows Avis' counter offer to acquire Dollar Thrifty Automotive Group, Inc. in a $1.3 billion cash-and-stock transaction and reflects Fitch's view that the proposed transaction has a range of potential outcomes.

At the proposed price and terms, Fitch views the acquisition positively and believes that the acquisition will complement Avis' value-oriented Budget brand and strengthen its market position in the U.S. rental car industry.

The agency said downward rating potential is created by the possibility of a bidding war if Avis were to substantially increase the debt needed to close the transaction. Fitch noted that Hertz Corp. has the right to increase its existing bid to match or surpass Avis' counter offer should Dollar Thrifty's board accept the proposed terms.

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