New Issue: Avis prices upsized $500 million 10½% five-year secured notes at 97 to yield 11.297%

By Paul A. Harris

Portland, Ore., May 5 – Avis Budget Car Rental, LLC and Avis Budget Finance, Inc. priced an upsized $500 million issue of 10½% five-year senior secured notes (Ba2/BB-) at 97 to yield 11.297% on Tuesday, according to market sources.

Citigroup Global Markets Inc. was the left bookrunner. Joint bookrunners were Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Barclays, Credit Agricole CIB and Scotia Capital (USA) Inc.

The issue size increased from $400 million.

The coupon came on top of coupon talk. The discount came at the cheap end of the 97 to 98 price talk.

In a covenant change, the leverage triggers within the covenant relief availability date were changed to a “gross first-lien leverage test” from a “net first-lien leverage test.”

In addition to a customary high-yield call structure the issuer may redeem up to 40% of the notes at par plus 50% of the coupon for the first 120 days with proceeds of any loan received pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The Parsippany, N.J.-based vehicle rental company plans to use the proceeds, including the proceeds resulting from the $100 million upsizing of the deal, for general corporate purposes.

Issuers:	Avis Budget Car Rental, LLC and Avis Budget Finance, Inc.
Amount:	$500 million, increased from $400 million
Maturity:	May 15, 2025
Securities:	Senior secured notes
Left bookrunner:	Citigroup Global Markets Inc.
Joint bookrunners:	Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Barclays, Credit Agricole CIB and Scotia Capital (USA) Inc.
Co-managers:	MUFG, RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc., BMO Capital Markets Corp., SMBC Nikko Securities America Inc., UniCredit Capital Markets LLC, BNP Paribas Securities Corp., Lloyds Securities Inc., Natixis Securities Americas LLC, NatWest Markets Securities Inc., SG CIB, U.S. Bancorp Investments Inc.
Coupon:	10½%
Price:	97
Yield:	11.297%
Spread:	1,092 bps
First call:	Make-whole call at Treasuries plus 50 bps until May 15, 2022, then callable at 107.875 (first call premium increased to 75% of coupon from 50%)
Special call:	Up to 40% of notes for 120 days at par plus 50% of coupon with proceeds from CARES Act loan
Equity clawback:	40% at 110.5 until May 15, 2022
Trade date:	May 5
Settlement date:	May 12
Ratings:	Moody's: Ba2
	S&P: BB-
Distribution:	Rule 144A and Regulation S for life
Price talk:	10½% coupon at 97 to 98 (also covenant changes)
Marketing:	Roadshow

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