Avis reports no meaningful debt maturities until 2023, good liquidity

By Devika Patel

Knoxville, Tenn., Oct. 30 – Avis Budget Group, Inc. has no significant debt maturities due until 2023.

The company completed a $350 million senior notes offering in the quarter and used the proceeds to pay off $100 million of existing notes and provide additional liquidity.

The company now has $2.4 billion of available liquidity, comprised of approximately $1.6 billion of cash and equivalents and approximately $800 million of availability under its revolving credit facility, and has cut costs significantly to ensure efficiency during the Covid-19 pandemic.

“Our proactive management of our corporate debt ensures that we have no meaningful debt maturities until 2023 and no need to refinance any fleet debt this year,” chief financial officer Brian Choi said on the company’s third quarter ended Sept. 30 earnings conference call on Friday.

The company had positive EBITDA last quarter and was able to cut costs significantly.

“Despite revenue being down 44% compared to the same period in the prior year, we achieved positive adjusted EBITDA of $220 million in the third quarter through cost removal actions and sizing fleet to demand by selling over 100,000 vehicles globally,” the company stated in a Friday press release.

“During the quarter we removed approximately $1 billion of costs, bringing the total to $2 billion year to date, and we are now on track to deliver more than $2.5 billion of cost removal for the full year,” the release stated.

“Globally, we reduced our total expenses in the quarter by approximately another $1 billion, bringing our total cost removal for the year to more than $2 billion,” president and chief executive officer Joe Ferraro said on the call.

“We expect to remove more than $2.5 billion before this year is over, as we persistently evaluate every line item of expense and find creative ways to work with suppliers and partners to find efficiencies.

“We’ve become a leaner and more efficient organization, which will continue to benefit our bottom line even after the impacts of this pandemic have subsided,” Ferraro said.

On Aug. 3, Avis Budget Car Rental LLC and Avis Budget Finance Inc. priced a $350 million non-fungible add-on to their 5¾% senior notes due July 15, 2027 (B3/B-) at 92 to yield 7.235% in a drive-by.

The issue price came at the rich end of the 91.5 to 92 price talk. Initial talk had the mirror notes pricing at 91 to 91.5.

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

The Parsippany, N.J.-based vehicle rental company earmarked the proceeds to redeem its outstanding $100 million of 5½% senior notes due 2023, with the remainder to be used for general corporate purposes.

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