The Car and Truck Fleet and Leasing Management Magazine

Cendant to Buy Budget Out of Chapter 11 Protection

August 21, 2002

Cendant Corp. has agreed to buy Budget Group Inc. out of Chapter 11 bankruptcy protection in a deal that would create the nation's second-largest car-rental company, people familiar with the deal told The Wall Street Journal. The deal could be announced as early as Wednesday, Aug. 21.Cendant, of New York, which owns rental-car operator Avis Holdings Inc., will pay $107.5 million in cash, these people say. It will cover certain transaction and bankruptcy-related costs, expected to be less than $5 million. Cendant will also assume $2.7 billion of Budget's debt secured by rental cars. In addition, Cendant will cover about $100 million in operating liabilities incurred by Budget prior to its bankruptcy filing.Budget, Daytona Beach, FL, could still accept a higher offer if another buyer enters the picture, although Cendant has negotiated a $15 million breakup fee. Cendant's deal has been approved by a committee of creditors as well as federal regulators.Cendant is buying Budget's operations in the U.S., Canada, Australia, New Zealand, and Latin America. Budget, which filed for bankruptcy-court protection in July, is seeking another buyer for its European, Middle Eastern, and African units.
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