SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTON 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 15, 1999
(Date of Report)
AVIS RENT A CAR, INC.
(Exact Name Of Registrant As Specified In Its Charter)
DELAWARE 1-13315 11-3347585
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
900 Old Country Road
Garden City, NY 11530
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 222-3000
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable
ITEM 2. ACQUISITION OR DISPOSTION OF ASSETS.
On June 30, 1999, Avis Fleet Leasing and Management Corporation ("Avis
Fleet"), a Texas corporation and a wholly-owned subsidiary of Avis Rent A
Car, Inc. (the "Company" or "Avis"), merged under Texas law into PHH
Holdings Corporation ("PHH Holdings"), a Texas corporation and indirect
subsidiary of Cendant Corporation ("Cendant") [NYSE:CD]. Pursuant to the
merger (see Exhibits 2.1 and 2.2), both PHH Holdings and Avis Fleet
survived as subsidiaries of their respective parent companies and Avis
Fleet acquired (i) the stock of the subsidiaries of PHH Holdings which
operate vehicle management and fuel card businesses in the United States,
Canada and Europe under the PHH and Wright Express names and (ii) all of
the property, rights and assets of such businesses. As consideration for
such assets, Avis Fleet paid $1.438 billion in cash and issued 7,200,000
shares of its Series A Preferred Stock and 40,000 shares of its Series C
Preferred Stock with a liquidation preference of $362 million to PHH
Corporation, an indirect subsidiary of Cendant and the parent of PHH
Holdings. The consideration was determined through arm's-length
negotiation among the parties, and the Company's Board of Directors, as
well as a special committee of independent directors. Each received a
fairness opinion from nationally recognized investment banking firms. The
Company obtained the cash consideration for this acquisition by (x)
issuing $500,000,000 of 11% Senior Subordinated Notes due 2009 in a
transaction exempt from registration under the Securities Act of 1933 and
(y) borrowing under a $1.35 billion senior secured credit facility with a
syndicate of lenders for which The Chase Manhattan Bank is acting as
agent. The Company intends to continue using the assets of the acquired
companies for the vehicle management and fuel card businesses. Immediately
prior to this acquisition, Cendant beneficially owned approximately 19% of
the Company's common stock. In addition, four of the Company's directors
are also directors of Cendant and two of such directors are executive
officers of Cendant. In addition, Cendant licenses the Avis trademark to
the Company pursuant to a 50-year master license agreement and receives
royalty fees based upon 4% of the Company's revenue, escalating to 4.5% of
the Company's revenue over a 5-year period. In addition, Cendant operates
the telecommunications and computer processing systems which includes
reservations rental agreement processing and fleet control for which
Cendant charges the company at cost.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable
ITEM 5. OTHER EVENTS.
Not applicable
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired:
The following financial statements are annexed hereto as Exhibit 99.1 and
are incorporated herein by reference:
PHH Vehicle Management Services
o Combined Financial Statements as of December 31, 1998 and 1997
and for the years ended December 31, 1998, 1997 and 1996 and
Independent Auditors' Report thereon.
o Unaudited Condensed Combined Financial Statements as of March
31, 1999 and for the three months ended March 31, 1999 and
December 31, 1998.
(b) Pro Forma Financial Information:
The following unaudited pro forma consolidated financial statements are
annexed hereto as Exhibit 99.2 and are incorporated herein by reference:
o Pro forma Consolidated Balance Sheet as of March 31, 1999
o Pro forma Consolidated Statements of Operations for the year
ended December 31, 1998 and the three months ended March
31,1999
The unaudited pro forma consolidated financial statements of the Company
have been derived by the application of pro forma adjustments to the
historical financial statements of Avis Rent A Car, Inc. ("Avis") and PHH
Vehicle Management Services ("VMS"). The unaudited pro forma consolidated
statements of operations for the year ended December 31, 1998 and for the
three months ended March 31, 1999, give effect to the acquisition
discussed in Item 2 as if it had occurred on January 1 of the earliest
period presented. The Unaudited Pro Forma Consolidated Financial
Statements assumes completion of the transfer of the capital stock of
Wright Express Financial Services Corporation (a wholly-owned subsidiary
of Wright Express LLC) as part of the acquisition discussed in Item 2 (the
"VMS Acquisition"). The unaudited pro forma consolidated balance sheet as
of March 31, 1999 gives effect to the acquisition discussed in Item 2 as
if it had occurred on such date. The pro forma adjustments are described
in accompanying notes.
The VMS Acquisition will be accounted for using the purchase method of
accounting for financial accounting purposes. The purchase price will be
allocated to the assets acquired and the liabilities assumed, based on
their respective fair values. The allocation of the purchase price
reflected in the Unaudited Pro Forma Consolidated Financial Statements is
preliminary. The adjustments that have been included in the Unaudited Pro
Forma Consolidated Financial Statements will change based upon the final
allocation of the purchase price when additional information concerning
asset and liability valuation is obtained. The actual allocation of the
purchase price and the resulting effect on operating income may differ
from the unaudited pro forma amounts included herein. However, the changes
are not expected to have a material effect on the Unaudited Pro Forma
Consolidated Financial Statements of the Company.
The Company believes that the accounting used to reflect the above
transactions provides a reasonable basis on which to present this
unaudited pro forma consolidated financial data. The pro forma
consolidated balance sheet and consolidated statements of operations are
unaudited and were derived by adjusting the historical financial
statements of Avis and VMS. The Unaudited Pro Forma Consolidated Financial
Statements are provided for informational purposes only and should not be
construed to be indicative of the Company's consolidated financial
position or results of operations had the acquisition discussed in Item 2
been consummated on the dates assumed and do not project the Company's
consolidated financial position or results of operations for any future
date or period. The Unaudited Pro Forma Consolidated Financial Statements
and accompanying notes should be read in conjunction with the Company's
historical Financial Statements and the VMS combined Financial Statements.
(c) Exhibits
Exhibit No. Exhibit Description
- ----------- --------------------------------------------------------------
2.1 Agreement and Plan of Merger and Reorganization, dated as of
May 22, 1999, by and among PHH Corporation, PHH Holdings
Corporation, Avis Rent A Car, Inc. and Avis Fleet Leasing and
Management Corporation.
2.2 Amendment to Agreement and Plan of Merger and Reorganization,
dated as of June 30, 1999, by and among PHH Corporation, PHH
Holdings Corporation, Avis Rent A Car, Inc. and Avis Fleet
Leasing and Management Corporation.
23.1 Consent of Deloitte & Touche LLP.
99.1 Combined Financial Statements as of December 31, 1998 and 1997
and for the Years Ended December 31, 1998, 1997 and 1996 and
Unaudited Condensed Combined Financial Statements as of March
31, 1999 and for the Three Months Ended March 31, 1999 and
1998 of PHH Vehicle Management Services.
99.2 Unaudited Pro Forma Consolidated Financial Data.
99.3 Press Release of the Company, dated June 30, 1999.
99.4 Certificate of Designation of Powers, Preferences and Special
Rights of Series A Cumulative Participating Redeemable
Convertible Preferred Stock and Qualifications, Limitations
and Restrictions Thereof of Avis Fleet Leasing and Management
Corporation.
99.5 Certificate of Designation of Powers, Preferences and Special
Rights of Series B Cumulative PIK Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Avis
Fleet Leasing and Management Corporation.
99.6 Certificate of Designation of Powers, Preferences and Special
Rights of Series C Cumulative Redeemable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Avis
Fleet Leasing and Management Corporation.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AVIS RENT A CAR, INC.
(Registrant)
Date: July 15, 1999 By: /s/ Kevin M. Sheehan
----------------------------
Kevin M. Sheehan
Executive Vice President and
Chief Financial Officer
Exhibit Index
Exhibit No. Exhibit Description
- ----------- --------------------------------------------------------------
2.1 Agreement and Plan of Merger and Reorganization, dated as of
May 22, 1999, by and among PHH Corporation, PHH Holdings
Corporation, Avis Rent A Car, Inc. and Avis Fleet Leasing and
Management Corporation.
2.2 Amendment to Agreement and Plan of Merger and Reorganization,
dated as of June 30, 1999, by and among PHH Corporation, PHH
Holdings Corporation, Avis Rent A Car, Inc. and Avis Fleet
Leasing and Management Corporation.
23.1 Consent of Deloitte & Touche LLP.
99.1 Combined Financial Statements as of December 31, 1998 and 1997
and for the Years Ended December 31, 1998, 1997 and 1996 and
Unaudited Condensed Combined Financial Statements as of March
31, 1999 and for the Three Months Ended March 31, 1999 and
1998 of PHH Vehicle Management Services.
99.2 Unaudited Pro Forma Consolidated Financial Data.
99.3 Press Release of the Company, dated June 30, 1999.
99.4 Certificate of Designation of Powers, Preferences and Special
Rights of Series A Cumulative Participating Redeemable
Convertible Preferred Stock and Qualifications, Limitations
and Restrictions Thereof of Avis Fleet Leasing and Management
Corporation.
99.5 Certificate of Designation of Powers, Preferences and Special
Rights of Series B Cumulative PIK Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Avis
Fleet Leasing and Management Corporation.
99.6 Certificate of Designation of Powers, Preferences and Special
Rights of Series C Cumulative Redeemable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Avis
Fleet Leasing and Management Corporation.