SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10308
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July 9, 1999 (June 30, 1999)
(Date of Report (date of earliest event reported))
Cendant Corporation
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction 06-0918165
of incorporation or (I.R.S. Employer
organization) Identification Number)
9 West 57th Street
New York, New York 10019
(Address of principal executive (Zip Code)
office)
(212) 413-1800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if applicable)
Item 2. Disposition of Assets
References to "Cendant", "Company" and "we" means Cendant
Corporation and its subsidiaries.
On June 30, 1999, we announced the completion of the disposition
of our Fleet Management Segment, which includes PHH Vehicle
Management Services Corporation, Cendant Business Answers (Europe)
Plc, The Harpur Group, Ltd. and Wright Express Corporation,
pursuant to an agreement between PHH Corporation ("PHH"), a
wholly-owned subsidiary of the Company, and Avis Rent A Car, Inc.
("ARAC"). Pursuant to the agreement, ARAC acquired our Fleet
Management Segment through the repayment in cash of $1.44 billion
of assumed intercompany debt and the issuance of $360 million of
convertible preferred stock of Avis Fleet Leasing and Management
Corporation ("Avis Fleet"), a wholly-owned subsidiary of ARAC to
PHH Corporation, a wholly-owned subsidiary. The convertible
preferred stock of Avis Fleet is convertible into common stock
of ARAC at our option upon the satisfaction of certain conditions,
including the per share price of ARAC Class A common stock
equaling or exceeding $50 per share and the Fleet Management
Segment attaining certain EBITDA (earnings before interest, taxes,
depreciation and amortization) thresholds, as defined. There are
additional circumstances upon which the shares of Avis Fleet
convertible preferred stock are automatically or mandatorily
convertible into ARAC common stock. The transaction follows a
competitive bidding process undertaken by Chase Securities Inc.,
our financial advisor.
We beneficially own approximately 19% of the currently outstanding
Class A common stock of ARAC and have four designees on the ARAC
Board of Directors. If all of the Avis Fleet convertible preferred
stock was converted into common stock of ARAC, then we would own
approximately 34% of ARAC's outstanding common equity (although
our voting interest would be limited, in most instances, to 20%).
We also license the Avis trademark to ARAC pursuant to a 50-year
master license agreement and receive royalty fees based upon 4% of
ARAC revenue, escalating to 4.5% of ARAC revenue over a 5-year
period. In addition, we operate the telecommunications and
computer processing system which services ARAC for reservations,
rental agreement processing, accounting and fleet control for
which we charge ARAC at cost. We also entered into certain
licensing and services agreements with ARAC and Avis Fleet in
connection with the aforementioned Fleet Management Segment
disposition.
We account for our investment in ARAC utilizing the equity method
and expect to record an after-tax gain of approximately $700
million from the transaction in the second quarter of 1999.
Completion of the transaction was a condition to the previously
announced "Dutch Auction" tender offer by Cendant Stock
Corporation, a wholly-owned subsidiary of the Company, to purchase
50 million shares of our common stock from existing shareholders
at prices of not greater than $22.50 per share nor less than
$19.75 per share.
Reference is made to our Form 8-K filed with the Securities and
Exchange Commission on June 22, 1999, which includes our unaudited
pro forma consolidated financial statements (i) for the year ended
December 31, 1998 and (ii) as of and for the three months ended
March 31, 1999, giving effect to the disposition of our Fleet
Management Segment and the purchase of 50 million shares of our
common stock pursuant to the aforementioned "Dutch Auction" tender
offer.
Reference is also made to Exhibit 99.1 herein, which is
incorporated by reference in its entirety.
Item 5. OTHER EVENTS
On June 30, 1999, we announced that at our July Board of
Directors' meeting we intend to reduce the size of our Board of
Directors from 17 to 14 members following the resignations of
three Directors. Robert P. Rittereiser, Craig R. Stapleton and E.
John Rosenwald, Jr., all of whom previously served on the Board's
Litigation Committee, have resigned following a vote by
shareholders on May 27, 1999 to eliminate the Committee. Reference
is made to Exhibit 99.2 herein, which is incorporated by reference
in its entirety.
Item 7. EXHIBITS
Exhibit
No. Description
- -------- -----------------------------------------------------------------------
99.1 Press Release: Cendant Corporation Completes Divestiture of Fleet
Segment; Avis Rent A Car, Inc. Acquires the Company's Fleet Segment
for $1.8 Billion
99.2 Press Release: Cendant Corporation Announces Board Changes; Company
Will Reduce Size of its Board from 17 to 14 Directors
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the
undersigned hereunto duly authorized.
CENDANT CORPORATION
BY: /s/ David M. Johnson
David M. Johnson
Senior Executive Vice President and
Chief Financial Officer
Date: July 9, 1999
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
REPORT DATED JULY 9, 1999 (JUNE 30, 1999)
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------ ----------------------------------------------------------------------
99.1 Press Release: Cendant Corporation Completes Divestiture of Fleet
Segment; Avis Rent A Car, Inc. Acquires the Company's Fleet Segment
for $1.8 Billion
99.2 Press Release: Cendant Corporation Announces Board Changes; Company
Will Reduce Size of its Board from 17 to 14 Directors