On Feb. 25, Dollar Thrifty Automotive Group Inc. announced amendments of its senior secured credit facility and fleet financing agreements with Chrysler Financial and another bank group. Under the amended agreements, the company will no longer be required to maintain a minimum leverage ratio, but must maintain a minimum adjusted tangible net worth of $150 million and a minimum of $100 million of unrestricted cash and cash equivalents. As of Dec. 31, 2008, the company had approximately $215 million of adjusted tangible net worth and approximately $230 million of unrestricted cash and cash equivalents. The amendments are intended to provide a long-term resolution of the financial covenant compliance issue that had been addressed with short-term amendments over the last five months.
"Dollar Thrifty is very pleased to announce the successful completion of these amendments in an incredibly difficult credit market. We greatly appreciate the ongoing support of our bank groups and Chrysler Financial during these challenging times. The amendments provide us with the financial flexibility needed to continue to execute our plans, and they remove the uncertainty associated with short-term amendments, all at a reasonable cost and on terms we feel are equitable. With these amendments now completed, we can dedicate all of our efforts to our top priorities - operational improvements, customer service, and maximizing cash flow and liquidity," said Scott L. Thompson, president and chief executive officer.
In connection with the amendment of the senior secured credit facility, the company prepaid $20 million of its term loan and permanently reduced the total revolving credit facility commitments to $231.3 million, which is in line with the company's financing needs under its operating plan. In addition, the amendment provides that revolving credit facility commitments will be restricted to issuances of letters of credit in future periods. The amendments provide for a 50 basis point increase in the interest rate borne by outstanding debt under all three financing agreements, including letters of credit. The company also paid one-time amendment fees of 50 basis points, based on outstanding commitments and/or loans. The company used approximately $24 million of unrestricted cash for the term loan payment, fees and expenses associated with the amendments.
"The Company's aggressive actions over the past several months to reduce costs, improve revenue and right-size operations were fundamental to achieving the resolution reflected in these amendments. Those actions, taken together with the amendments to our financing arrangements and our recently announced $490 million prepayment of our liquidity and conduit facilities, position us to manage our liquidity to meet our operating objectives in today's challenging environment," said Thompson.