Avis Budget to use new debt financing for purchase of Avis Europe

By Sara Rosenberg

New York, June 14 - Avis Budget Group Inc. plans on using committed financing that has been arranged through a syndicate of banks and/or proceeds from the issuance of debt securities to help fund its acquisition of Avis Europe plc, company officials said in a call on Tuesday.

The amount of incremental debt that would be needed for the transaction is roughly $380 million.

"[We] have committed bank financing for this transaction. Our expectation, though, is to take out those commitments in the form of new debt offering or issuances," officials remarked in the call.

"We haven't yet broken down what those would be and certainly it'll be somewhat dependant on market conditions and where the best access is for us as we go into the market over the next few months."

Other funds for the transaction will come from $400 million of cash on hand and the issuance of up to $250 million of common stock.

Under the agreement, Avis Europe is being acquired for 3.15 pounds in cash per share. The transaction is valued at 635 million pounds, or about $1 billion.

Closing is expected to take place in October, subject to Avis Europe shareholder approval, court approval and regulatory clearances.

Upon the acquisition becoming effective, the combined Avis Budget and Avis Europe businesses will have annual revenues of about $7 billion and owned or licensed operations in more than 150 countries.

Morgan Stanley and Citigroup are acting as financial advisors to Avis Budget. Barclays Capital is acting as financial adviser to Avis Europe.

Parsippany, N.J.-based Avis Budget and England-based Avis Europe are vehicle rental companies.

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