DOW JONES NEWSWIRES
Dollar Thrifty Automotive Group Inc. (DTG) gained flexibility in
fleet financing in conjunction with a reduction of a credit
facility as the company navigates the financial crisis.
The move gives the car-rental company flexibility to buy cars
based on favorable pricing and allows it to reduce its credit
exposure to the residual-value guarantees provided by the vehicle
manufacturers.
The approvals from Dollar Thrifty's ratings agencies and
insurers end the requirement that it maintain a percentage of the
value of its vehicle inventory under manufacturer-guaranteed
repurchase or depreciation programs.
The approval comes just a day after Ford Motor Co. (F) posted a
90% plunge in January sales to rental companies and General Motors
Corp. (GM) reported an 80% drop in fleet sales to 13,000 - the
lowest level since 1975. Car-rental companies, a big chunk of fleet
sales, are under financial straits amid falling rental demand and
trimming back purchases.
Dollar Thrifty also amended its credit pact to reduce the size
of its total revolving loan and letter of credit commitment to $290
million as the company seeks to scale down its business to reflect
the current economic environment.
Last month, Dollar Thrifty warned again of a "significantly"
wider fourth-quarter loss on lower revenue as the car rental market
struggled amid the broader auto industry's woes. Still, the company
- whose brands are Dollar Rent A Car and Thrifty Car Rental - said
it will end the quarter with more than $210 million in cash as
operating losses and changes in working capital were offset by a
$100 million cash dividend from its vehicle-finance subsidiary.
Dollar Thrifty is viewed as more vulnerable than some other car
rental companies in part because of its ties to Chrysler LCC. The
rental firm was spun off by Chrysler in 1997, and Chrysler products
still account for a large part of its fleet.
Shares closed down 2.4% Wednesday at $1.21 and have lost 93% of
their value in the past year.
-By Lauren Pollock, Dow Jones Newswires; 201-938-5964;
lauren.pollock@dowjones.com