Enterprise Rent-A-Car and Advantage Rent-A-Car announced March 3 they have reached an agreement on the purchase by Enterprise of certain assets of Advantage out of bankruptcy for $19 million. The transaction is subject to approval by the bankruptcy court, which may also consider competing bids. At this time it is not known if any competing bids have been considered. If accepted, the transaction is expected to close in April 2009.
The asset purchase agreement gives Enterprise the ability to close or continue to operate any of Advantage’s rental car facilities. Currently, Advantage operates eight locations in four cities: Denver, Orlando, Salt Lake City and Phoenix. The transaction also applies to certain other Advantage properties that recently closed.
Upon the court’s approval of the Enterprise purchase agreement, Enterprise will take ownership of:
- the right to lease all or part of Advantage’s rental vehicle fleet;
- Advantage’s customer lists;
- Advantage’s Web address and toll-free reservation phonelines;
- Certain Advantage corporate accounts;
- Advantage Rent-A-Car trade-mark and copyright marks;
- Advantage Yellow Pages advertising; and
- Advantage trade secrets, know-how, and other intellectual property.
In addition, Advantage Chairman Dennis Hecker will enter into a consulting agreement with Enterprise as part of the transaction. “We look forward to working with Mr. Hecker in the coming years and to serving the quality customer base he built at Advantage,” said Andrew Taylor, chairman and chief executive officer of Enterprise Rent-A-Car, in a press statement.
“I am excited by the sale of Advantage to Enterprise,” said Hecker in the statement. “I am confident that Advantage’s loyal customers will enjoy the great service and the expanded network of locations offered by the Enterprise companies.”
Existing Advantage locations are continuing operations as usual through the pending close of sale. After the sale is completed, “Under the terms of the purchase agreement, we will have the opportunity to review locations and property leases and may or may not choose to operate them going forward,” said Enterprise in a written response to questions posed by Auto Rental News.
No existing supply agreements with manufacturers will remain in force after the sale, according to Advantage’s written responses to the same set of questions.
Both companies say the deal is not connected to, and will not affect, Hecker’s lawsuits with Chrysler Financial Services. (A Jan. 23 lawsuit brought by Chrysler Financial alleges that Hecker owes Chrysler Financial $550 million for non-repayment of loans. The action follows a lawsuit Hecker brought against Chrysler Financial on Nov. 13 in which he alleges the captive canceled his credit lines without warning.)
“Our agreement is strictly for the purchase of the assets of Advantage. We are not subject to any related liabilities or litigation,” Enterprise said.
Advantage continues to lease its existing fleet for its daily operations. The current agreement with Enterprise allows them the right to lease all or part of Advantage’s rental vehicle fleet for 45-90 days, Enterprise said.
Resolution of other issues, such as how the deal will affect the Enterprise brand’s concession agreements in those airports with an existing Advantage location, is too soon to know, according to Enterprise.
Chris Brown is executive editor of Auto Rental News. He can be reached at [email protected].
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