Hertz incremental term loan expected to launch in September or October

By Sara Rosenberg

New York, Aug. 28 - Hertz Global Holdings Inc. is anticipating bringing its incremental term loan to market sometime in late September or early October, according to a market source.

Barclays, Bank of America Merrill Lynch and Deutsche Bank are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Dollar Thrifty Automotive Group Inc. for $87.50 per share. The transaction has an equity value of $2.6 billion and a corporate enterprise value of $2.3 billion.

Currently, the company has a commitment for a $1.95 billion 365-day unsecured bridge loan that is priced at Libor plus 537.5 basis points with a 1% Libor floor. The spread will increase by 50 bps every three months until it hits a cap.

The incremental term loan will be used to replace some of that bridge loan, and the rest of the bridge debt will be taken out with bonds.

Total debt to EBITDA will be 3.7 times, or 3.4 times with cost synergies, and total debt to gross EBITDA will be 4 times, or 3.8 times with cost synergies.

The combined company would have combined June 30 trailing-12-month sales of $10.2 billion and EBITDA of around $1.8 billion.

Closing is expected in mid-to-late October, subject to the tender of a majority of the shares of Dollar Thrifty common stock, regulatory clearance by the Federal Trade Commission and other customary conditions.

Hertz is a Park Ridge, N.J.-based auto and equipment rental company. Dollar Thrifty is a Tulsa, Okla.-based renter and leaser of vehicles.

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