Hertz falls following numbers; Hanesbrands rises with amendment; LCDX trades up

By Sara Rosenberg

New York, Feb. 24 - Hertz Global Holdings Inc.'s term loan headed lower in trading on Tuesday on the back of the company's release of quarterly results, and Hanesbrands Inc.'s term loan B was higher as news of an amendment emerged.

Also in the secondary market, LCDX 10 was stronger in sympathy with equities, while the cash market was pretty much unchanged on relatively light volume.

Hertz slides with earnings

Hertz's term loan gave up a few points during the session following the company's release of numbers on Monday night that showed a hefty loss in the fourth quarter, according to a trader.

The term loan was quoted at 66½ bid, 67½ offered, down from previous levels of 69 bid, 70 offered, the trader said.

For the fourth quarter, the company reported a net loss of $1.21 billion, or $3.76 per share, compared to net income of $80.7 million, or $0.25 per share in the 2007 fourth quarter.

Adjusted pre-tax loss was $103.7 million, versus adjusted pre-tax income of $152.5 million in 2007, and adjusted net loss was $73 million, compared to adjusted net income of $93.9 million last year.

Revenues for the quarter were $1.79 billion, a decrease of 16.4%, from $2.14 billion in 2007.

And, corporate EBITDA for the quarter was $116.9 million, a decrease of 69.7% from the same period in 2007.

As for an outlook, due to continued volatility in car and equipment rental markets, with volume, pricing and residual value declines attributable to the global recession, the company said it was unable to provide specific quarterly or full year 2009 revenue, earnings and cash flow guidance.

Hertz reduces debt

Hertz also said on Monday night that it ended the fourth quarter with total debt of $10.97 billion and net corporate debt of $3.82 billion, compared with total debt of $12.84 billion and net corporate debt of $4.25 billion as of Sept. 30.

Levered cash flow for the quarter was $430.5 million, compared with $586.8 million in the fourth quarter of 2007.

"Hertz experienced unprecedented volume, pricing and residual value contraction across all of its businesses in the fourth quarter of 2008. Nevertheless, we generated almost $117 million of corporate EBITDA," said Mark P. Frissora, chairman and chief executive officer, in a news release.

"Additionally, for the fourth quarter, we generated improved total net cash flow of $1.8 billion, reducing total debt by $1.9 billion, and improved liquidity at year-end to approximately $4.8 billion. We are committed to further mitigating the impact of continued revenue declines on our profits, including a goal to eliminate an additional $350 million of costs in 2009, and generating positive total net cash flow throughout the current global recession," Frissora added.

Hertz is a Park ridge, N.J.-based car rental brand.

Hanesbrands inches higher

Hanesbrands' term loan B posted some gains on Tuesday as the company held an investor day meeting to discuss its business, and during the meeting announced that it launched an amendment to its first-lien credit facility, according to a trader.

The term loan B was quoted at 93½ bid, 95½ offered, up from Monday's levels of 92½ bid, 94 offered, the trader said.

Hanesbrands said in the call that it wants to modify the leverage covenant under its credit facility even though it is currently in compliance with the requirement and expects to remain in compliance.

The company explained that it is seeking the amendment as a result of the uncertainty in the consumer and financial markets, and because the leverage requirement dramatically changes over the course of this year.

Hanesbrands' leverage ratio tightening

At year-end 2008, Hanesbrands' leverage ratio requirement was 3.75 times, while the company's actual leverage ratio was 3.3 times.

However, the company explained that this ratio tightens over the course of 2009 and by the fourth quarter it becomes 3.0 times.

In order to play it safe, Hanesbrands decided to seek this proposed amendment. The amendment was launched on Monday and the company held a conference call on Tuesday afternoon with debt holders.

Hanesbrands also said in the call that it plans on reducing its debt leverage by using free cash flow to prepay debt over the next 12 to 24 months.

In the fourth quarter of 2008, the company repaid $139 million of debt, including $125 million of its term loan B, and smaller amounts of its accounts receivables securitization and bonds.

Hanesbrands is a Winston-Salem, N.C.-based marketer of innerwear, outerwear and hosiery apparel.

LCDX better with stocks

LCDX 10 headed higher in trading on Tuesday as equities were stronger, but the cash market felt pretty much flat, according to a trader.

The index was quoted at 73.60 bid, 73.90 offered, up from Monday's levels of around 72.40 bid, 72.60 offered, the trader said.

Nasdaq closed up 54.11 points, or 3.9%, NYSE closed up 187.95 points, or 4.06%, S&P 500 closed up 29.81 points, or 4.01%, and Dow Jones Industrial Average closed up 236.16 points, or 3.32%.

As for the cash market in general, things felt weaker in the morning, but were then a little better by the close, so that the end result was that level were basically unchanged on a day-over-day basis, the trader added.

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