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Press Releases

Hertz Board Approves Separation Of Equipment Rental Business
Announces New $1 Billion Share Repurchase Program

NAPLES, Fla., March 18, 2014 /PRNewswire/ -- The Hertz Corporation (NYSE: HTZ) ("Hertz" or "the Company") today announced that its board of directors has approved plans to separate into two independent, publicly traded companies. The two companies will be "Hertz," comprised of the Hertz, Dollar, Thrifty and Firefly rental car businesses as well as Donlen, a provider of fleet leasing and management services, and "HERC," the Hertz Equipment Rental Corporation. The separation is planned to be in the form of a tax-free spin-off to Hertz shareholders, and the Company has received a Private Letter Ruling from the Internal Revenue Service that allows Hertz to separate the businesses in a tax-efficient manner. Hertz expects the separation of HERC to close by early 2015.

The Hertz Corporation

Hertz will receive net cash proceeds from a HERC spin-off of approximately $2.5 billion that will be used to pay down Hertz debt and support a newly approved $1 billion share repurchase program. Under the new share repurchase program, the majority of the shares are likely to be purchased following the HERC separation, dependent on market conditions. The share repurchases could reach 20% of Hertz's outstanding shares of common stock, which includes the $1 billion already approved. This new program replaces the $300 million share repurchase program that the Company announced in 2013, under which the Company has utilized approximately $87.5 million to repurchase Hertz shares.

Post separation, Hertz expects to maintain a target net corporate leverage ratio of between 2.5x to 3.5x net debt / EBITDA. Given Hertz's new target net corporate leverage ratio, the Company may opportunistically look to return additional capital to shareholders on an ongoing basis, subject to market conditions and other factors.

"The actions announced today will create separate companies which we expect to benefit from improved financial profiles that include increased earnings stability and higher returns on capital," said Mark P. Frissora, Chairman and Chief Executive Officer of The Hertz Corporation. "Our rental car and equipment rental businesses are leaders in their respective markets with valuable assets and tremendous long-term potential. Through unbundling these undervalued assets, we unleash current and future shareholder value. In fact, we believe there is a potential for multiple expansion even if both businesses only trade in line with their peers. Additionally, the separation will help each business focus on its strategic and operational performance. With respect to capital allocation, our new leverage ratios may allow for incremental return of capital to our shareholders given the current credit environment."

The Hertz board believes the planned separation of the equipment rental business from the car rental business would, among other things:

  • Create a stronger growth profile and more competitive position for each company with enhanced management focus, resources and processes that are more directly aligned with each business's unique strategic priorities;
  • Optimize the companies' capital structures based on the objectives of each independent company;
  • Allow each business to attract and retain personnel by offering equity-linked compensation; and
  • Create a more targeted investment opportunity with multiples and trading valuations that more accurately reflect the strengths and opportunities of each business.

Hertz Post Separation: A World Leading Rental Car Company

Following the separation, Hertz will remain a market leading rental car company with approximately 11,555 rental locations throughout North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand – the largest network in the world. The Company's portfolio of brands includes Hertz, the number one airport and general use car rental brand in the world, as well as Dollar, Thrifty and Firefly, which reach other fast growing consumer segments within the leisure and value markets. Through Donlen, Hertz also offers fleet leasing and management services. The rental car and fleet leasing business had annual revenues of $9.23 billion in 2013.

Hertz will continue to focus on its key growth drivers following the separation. These include the integration of Dollar Thrifty, expanding its off-airport footprint and driving fleet efficiency, the introduction of new mobility services to meet consumer needs, building on its success with Donlen leasing, the roll-out of new rental technology, and its Lean / Six Sigma cost management programs.

The Company expects the separation of HERC to lead to an improved financial profile for Hertz, including less earnings volatility, higher returns on invested capital, and accelerated free cash flow growth. Hertz will target a corporate leverage ratio of 2.5x to 3.5x net debt / EBITDA. Post separation, the corporate leverage ratio is expected to be at the lower end of this range. This provides strength and flexibility across market cycles as well as a better ability to opportunistically return capital to shareholders. These financial strengths, together with the improved operating focus enabled by the separation and the continued operating and financial outperformance of the Hertz business, are expected to support a higher trading multiple for the new Hertz.

HERC Post Separation: A World Leading Equipment Rental Company

Following the separation, HERC will remain one of the largest and most diversified equipment rental businesses in the world with approximately 335 branches in the United States, Canada, France, Spain, China and Saudi Arabia, as well as through international franchisees. HERC, which has one of the youngest and most balanced fleets in the industry, rents a broad range of equipment, including aerial manlifts, air compressors and tools, earthmoving equipment and power generators, forklifts and material handling, pumps, and trucks and trailers. HERC also derives revenues from the sale of new and used equipment and consumables as well as through its Hertz Entertainment Services division, which rents lighting and related aerial products used primarily in the U.S. entertainment industry.

HERC had annual revenues of over $1.5 billion in 2013, with 38% of its 2013 revenues derived from the construction market, 26% from industrial, 36% from other markets including oil and gas, and from other specialty niche markets, such as pump and power, government services, and the entertainment industry.

Through investments in its fleet and 11 acquisitions and one joint venture since 2010, HERC has significantly expanded its product line, penetrated new end markets and broadened its geographic footprint, particularly within North America. As a separate company, with the resources devoted to its growth strategies, and management focus and compensation more closely aligned with the business, HERC will be better able to capitalize on these strengths and drive stronger operating and financial performance that is less impacted by market cyclicality.

As a standalone equipment rental company with a competitive operating profile, it is expected that HERC will be a leader among its peers. In addition to the expected strong growth in the business, a newly-public HERC will have an attractive currency to support its strategic initiatives in what remains a fragmented marketplace. At separation, it is expected that HERC will have a leverage ratio of 3.5x to 4.0x net debt / EBITDA. HERC will focus its capital allocation on fleet investment to drive growth, acquisitions and debt reduction.


Following the HERC separation, Mark Frissora will continue to lead Hertz as Chairman and Chief Executive Officer. HERC will determine and announce its board of directors and management positions as the separation plans are finalized.


Hertz has engaged BofA Merrill Lynch and Barclays as financial advisors, Jenner & Block LLP and Debevoise & Plimpton LLP as legal counsel, and KPMG LLP as tax advisors.

Conference Call and Webcast

Hertz will hold a conference call today, March 18, 2014 at 10:00 a.m. (EDT) to discuss the separation announcement and the Company's fourth quarter and full year 2013 financial results. To access the conference call live, dial 800-230-1074 in the U.S. and 612-332-0342 for international callers using the passcode: 321999 or listen via webcast at The conference call will be available for replay one hour following the conclusion of the call until April 1, 2014 by calling 800-475-6701 in the U.S. or 320-365-3844 for international callers with the passcode: 321999. The press release and slide presentation will be available on the Company's website,

About Hertz

Hertz operates its car rental business through the Hertz, Dollar, Thrifty and Firefly brands from approximately 11,555 corporate and licensee locations in approximately 145 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz is the largest worldwide airport general use car rental brand, operating from approximately 10,090 corporate and licensee locations in approximately 145 countries. Our Dollar and Thrifty brands have approximately 1,400 corporate and franchise locations in approximately 75 countries. Hertz is the number one airport car rental brand in the U.S. and at 130 major airports in Europe. Hertz is an inaugural member of Travel + Leisure's World's Best Awards Hall of Fame and was recently named, for the thirteenth time, by the magazine's readers as the Best Car Rental Agency. Hertz was also voted the Best Overall Car Rental Company in Zagat's 2013/14 U.S. Car Rental Survey, earning top honors in 14 additional categories, and the Company swept the global awards for Best Rewards Program and Best Overall Benefits from Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, and unique vehicles offered through the Company's Adrenaline, Prestige, Green Traveler, and Dream Car Collections, also set Hertz apart from the competition. Additionally, Hertz owns the vehicle leasing and fleet management leader Donlen Corporation and operates the Hertz 24/7TM hourly car rental business. The Company also owns a leading North American equipment rental business, Hertz Equipment Rental Corporation, which includes Hertz Entertainment Services. More information about the Company can be found at

Cautionary Note Concerning Forward-Looking Statements

Certain statements contained in the press release and in related comments by our management include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning the Company's outlook, anticipated revenues and results of operations, as well as any other statement that does not directly relate to any historical or current fact. These forward-looking statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar expressions. These statements are based on certain assumptions that the Company has made in light of industry experience as well as perceptions of historical trends, current conditions, expected future developments and other factors that the Company believes are appropriate in these circumstances. We believe these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative.

Among other items, such factors could include: the effect of our proposed separation of HERC and ability to obtain the expected benefits of any related transaction; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; our ability to collect amounts owed by Simply Wheelz, LLC and uncertainty of our future commercial arrangements with Franchise Services of North America and its subsidiary Simply Wheelz, LLC; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets, including on our pricing policies or use of incentives; occurrences that disrupt rental activity during our peak periods; our ability to achieve cost savings and efficiencies and realize opportunities to increase productivity and profitability; an increase in our fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs; our ability to accurately estimate future levels of rental activity and adjust the size and mix of our fleet accordingly; our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning equipment and to refinance our existing indebtedness; our ability to integrate the car rental operations of Dollar Thrifty and realize operational efficiencies from the acquisition; the risk that expected synergies and cost savings from the Dollar Thrifty acquisition may not be fully realized or realized within the expected time frame; the operational and profitability impact of the Advantage divestiture and the divestiture of the airport locations that we agreed to undertake in order to secure regulatory approval for the Dollar Thrifty acquisition; safety recalls by the manufacturers of our vehicles and equipment; a major disruption in our communication or centralized information networks; financial instability of the manufacturers of our vehicles and equipment; any impact on us from the actions of our licensees, franchisees, dealers and independent contractors; our ability to maintain profitability during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); shortages of fuel and increases or volatility in fuel costs; our ability to successfully integrate acquisitions and complete dispositions; our ability to maintain favorable brand recognition; costs and risks associated with litigation; risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt and increases in interest rates or in our borrowing margins; our ability to meet the financial and other covenants contained in our Senior Credit Facilities, our outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements; changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on earnings; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect our operations, the cost thereof or applicable tax rates; changes to our senior management team; the effect of tangible and intangible asset impairment charges; the impact of our derivative instruments, which can be affected by fluctuations in interest rates and commodity prices; and our exposure to fluctuations in foreign exchange rates. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

The Company therefore cautions you against relying on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.



SOURCE The Hertz Corporation

For further information: Leslie Hunziker, Hertz Investor Relations (239) 552-5700, or Richard Broome, Hertz Media Relations (239) 552-5558,