Hertz targeting leverage ratio of 2x, hoping for upgrade to investment-grade status

By Jennifer Lanning Drey

Portland, Ore., Dec. 3 - Hertz Corp. has targeted achieving a net corporate debt-to-corporate EBITDA ratio of 2 times, which would require the company to decrease debt by approximately $1 billion over the next two years, Mark P. Frissora, Hertz's chief financial officer, said Monday at the Bank of America Credit Conference in Orlando, Fla.

The ratio stood at 3x on Sept. 30.

If maintained, reaching the target ratio of 2x could boost the company to investment-grade status, which Frissora said would allow it to participate in areas where it cannot currently participate. In particular, he said Hertz would like to offer longer-term leases to its corporate customers but must lower its leverage in order to be able to do so.

The company plans to achieve the leverage ratio goal by generating about $1 billion in incremental free cash flow, he said.

Hertz currently has $4.1 billion of liquidity, a level with which Frissora said the company is very comfortable. The company's total net debt stood at $12.21 billion on Sept. 30.

Hertz has identified $1.4 billion in potential revenue growth opportunities available through current initiatives including off-airport expansions, growing its value-priced leisure market strategy, making selective acquisitions and market expansions and expanding car sharing and hourly rental programs.

Hertz, a subsidiary of Hertz Global Holdings, Inc., is a Park Ridge, N.J.-based rental car company.

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