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Avis Budget Group plans $500 million senior notes offering

Published 10-09-2024, 05:04 pm
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PARSIPPANY, N.J. - Avis Budget (NASDAQ:CAR) Group, Inc. (NASDAQ: CAR), a global provider of mobility solutions, announced its intention to issue $500 million in senior notes due 2030 through its subsidiaries. The offering is subject to customary market conditions. The company stated that the proceeds would be used for general corporate purposes, which may include repaying existing debts.


The senior notes will be guaranteed by Avis Budget Group and some of its U.S. subsidiaries, ensuring that the parent company stands behind the debt obligations of the issuers. Specifically, the funds may be directed toward repaying the company's floating rate term loan C due in 2029 and outstanding fleet debt. Additionally, part of the proceeds will cover the fees and expenses related to these transactions.


The notes are being offered in a private placement to qualified institutional buyers in accordance with Rule 144A, or to non-U.S. persons outside the United States under Regulation S, both under the Securities Act of 1933. The securities will not be registered under the Securities Act or any state securities laws and cannot be offered or sold in the United States absent registration or an applicable exemption from such requirements.


Avis Budget Group operates its car rental services under the Avis, Budget, and Zipcar brands, with approximately 10,250 rental locations worldwide. The company primarily manages its car rental offices in North America, Europe, and Australasia directly, while it operates through licensees in other regions.


The company has cautioned that this press release contains forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These statements relate to the completion and terms of the offering, as well as the intended use of the proceeds. Potential investors are referred to the company's SEC filings for a deeper understanding of these risks.


The information about the planned offering is based on a press release statement from Avis Budget Group, Inc.


In other recent news, Avis Budget Group has reported a strong Q2 performance, with revenues exceeding the $3 billion mark and an adjusted EBITDA hitting $214 million. The company sold a record number of vehicles in the first half of the year, boosting fleet utilization. Growth in rental days was seen in both the Americas and international segments, contributing to the company's positive outlook for pricing and utilization in the upcoming summer and third quarter.


Avis Budget Group has also emphasized its focus on operational efficiency and its continued partnership with the PGA Tour. The company's Q3 adjusted EBITDA is expected to range from $500 million to $600 million, and it plans to maintain a net debt of approximately $350 million for the remainder of the year.


Despite a 6% sequential decline in June, Avis Budget Group has seen reservation growth and strong commercial demand. The company is confident in its preparedness for inflationary challenges and potential recessions, and it has the ability to issue more than $1 billion of debt, providing a liquidity cushion. These are the recent developments in Avis Budget Group.


InvestingPro Insights


Avis Budget Group, Inc. (NASDAQ: CAR) is navigating challenging financial waters as it announces a $500 million senior notes offering. InvestingPro data highlights the company's market capitalization at approximately $2.49 billion, with a notably low price-to-earnings (P/E) ratio of 3.26. This P/E ratio has slightly decreased in the last twelve months as of Q2 2024, sitting at 3.04, which could indicate the stock is undervalued relative to earnings.


The company's revenue has seen a slight decline of 0.59% over the same period, which might be a contributing factor to the decision to issue debt for general corporate purposes, including the repayment of existing debts. Despite the decrease in revenue, Avis Budget Group has maintained a solid gross profit margin of 32.36%, showcasing its ability to retain a significant portion of sales as gross profit.


InvestingPro Tips further inform us that Avis Budget Group operates with a significant debt burden, which aligns with the company's current strategy to manage its financial obligations. Moreover, the Relative Strength Index (RSI) suggests that the stock is in oversold territory, hinting at a potential undervaluation by the market. For investors seeking a deeper dive into Avis Budget Group's financial health, InvestingPro offers additional tips, with 6 analysts having recently revised their earnings expectations downwards for the upcoming period, an important consideration for understanding the company's future performance.


For those interested in exploring the full range of insights, InvestingPro provides a total of 18 tips for Avis Budget Group, available at: https://www.investing.com/pro/CAR. This resource could prove invaluable for investors looking to make an informed decision on whether to participate in the private placement or consider other investment opportunities with the company.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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