Fitch Maintains Rating Watch Negative on Hertz Following Donlen Acquisition

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has maintained the Rating Watch Negative on Hertz Corporation's (Hertz) ratings following its announcement of its intention to acquire Donlen Corporation for $930 million. The ratings were first placed on Rating Watch Negative on May 11, 2011, following Hertz's increased bid for Dollar Thrifty. A complete list of ratings appears at the bottom of this release.

Hertz has agreed to acquire Donlen Corporation, a privately held vehicle fleet leasing and management company, for $930 million, consisting of a $250 million cash payment and the assumption of approximately $680 million of outstanding fleet debt. The acquisition is expected to close on or before September 30, 2011.

Resolution of the Rating Watch remains highly dependent on the outcome of Hertz's bid to acquire Dollar Thrifty. Fitch does not believe the acquisition of Donlen alters Hertz's intention to acquire Dollar Thrifty. If and when the Dollar Thrifty deal is consummated, Fitch will review the acquisition's prospective impact on Hertz's credit profile and capital structure, including any increase in leverage to finance the cash portion of the transaction, its ability to achieve proposed synergies, expected integration costs, and Hertz's flexibility to respond to sector and cyclical downturns. To the extent Hertz bids more aggressively without offsetting additions to capital, Fitch believes that Hertz's ratings could be downgraded by one or more notches.

On its own, Fitch views the acquisition of Donlen as neutral to Hertz's existing ratings. Fitch notes that the acquisition of Donlen requires a relatively small cash outlay and is not expected to result in a significant increase in leverage. Fitch views the acquisition as complementary because it will extend Hertz's product offerings to its corporate customers, including yearly and multi-year fleet leasing options in addition to the current hourly, daily, monthly service options.

Implicit in Fitch's current view is the expectation that Hertz's stand alone near-term financial performance will continue to improve modestly due to improved rental car demand and efforts to lower costs by optimizing fleet utilization and operating efficiencies.

The Rating Watch Negative is maintained for the following ratings:

Hertz Corporation

--Issuer Default Rating (IDR) 'BB-';

--Senior secured revolving facility 'BBB-';

--Secured term facility 'BBB-';

--Letter of credit facility 'BBB-';

--Senior unsecured debt 'BB-'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2010);

--'Finance and Leasing Companies Criteria' (Aug. 16, 2010).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=587245

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