Moody's rates CCMG notes B1, B2; Hertz loans Ba2

Moody's Investors Service said it assigned new ratings to The Hertz Corp. and CCMG Acquisition Corp. in connection with the proposed acquisition of Hertz from Ford Motor Co. by a private equity group consisting of Clayton, Dubilier & Rice Inc., The Carlyle Group and Merrill Lynch Global Private Equity.

Ratings assigned to CCMG include a Ba3 corporate family rating, B1 $2.2 billion senior unsecured notes, B2 $0.6 billion senior subordinated notes and a SGL-2 speculative grade liquidity rating.

Ratings assigned to Hertz include a Ba2 $1.8 billion secured term loan facility and Ba2 $1.6 billion asset-based loan facility with $400 million expected to be outstanding.

The outlook is stable.

The ratings reflect the considerable increase in leverage and the related erosion in credit metrics that will result from the acquisition. Moody's predicted total debt will increase from $11.1 billion to $13.2 billion, interest coverage will deteriorate from 2.2x to 1.3x, debt to EBITDA will increase from 4.0x to 4.8x and debt to revenues will increase from 1.5x to 1.8x.

Hertz retains some formidable strengths, the agency said, including leading market positions in both the on-airport car rental and the equipment rental sectors, an expanding presence in the domestic off-airport market, a robust recovery in the equipment rental sector and a highly capable and deep management team that will remain in place.

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