Cendant to Buy Budget Out of Chapter 11 Protection

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.