Item 1.01 Entry into a Material Definitive Agreement
HVF III Rental Car Backed Note Offerings
On January 19, 2022, Hertz Vehicle Financing III LLC ("HVF III"), a
wholly-owned, special-purpose and bankruptcy remote subsidiary of The Hertz
Corporation ("THC"), issued two series of notes to unaffiliated third parties:
(1) the Series 2022-1 Fixed Rate Rental Car Asset Backed Notes, Class A, Class
B, and Class C, in an aggregate principal amount equal to $652,500,000 pursuant
to the Series 2022-1 Supplement (the "Series 2022-1 Supplement"), dated as of
January 19, 2021, among HVF III, as issuer, THC, as administrator, and The Bank
of New York Mellon Trust Company, N.A. ("BNYM"), as trustee, to the Base
Indenture (the "Base Indenture"), dated as of June 29, 2021, which was
previously filed as Exhibit 10.7 to the Current Report on Form 8-K filed on July
7, 2021, and (2) the Series 2022-2 Fixed Rate Rental Car Asset Backed Notes,
Class A, Class B, and Class C, in an aggregate principal amount equal to
$652,500,000 pursuant to the Series 2022-2 Supplement (the "Series 2022-2
Supplement"), dated as of January 19, 2021, among HVF III, as issuer, THC, as
administrator, and BNYM, as trustee, to the Base Indenture. In addition, HVF III
also issued (1) the Series 2022-1 Fixed Rate Rental Car Asset Backed Notes,
Class D, in an aggregate principal amount equal to $97,500,000, pursuant to the
Series 2022-1 Supplement, which were purchased by THC and (2) the Series 2022-2
Fixed Rate Rental Car Asset Backed Notes, Class D, in an aggregate principal
amount equal to $97,500,000, pursuant to the Series 2022-2 Supplement which were
purchased by THC.
The Series 2022-1 Fixed Rate Rental Car Asset Backed Notes, Class A, Class B,
Class C and Class D (collectively, the "Series 2022-1 Notes") and the Series
2022-2 Fixed Rate Rental Car Asset Backed Notes, Class A, Class B, Class C and
Class D (collectively, the "Series 2022-2 Notes") are described together below
as the "Series 2022 Notes."
THC utilizes the HVF III securitization platform to finance its U.S. rental car
fleet. Subject to certain conditions, additional notes may be issued in the
future under the Base Indenture.
The Series 2022 Notes were issued with the following terms:
Expected Final Legal Final
Notes Issued Principal Interest Rate Payment Date Payment Date
Series 2022-1
Class A $ 525,000,000 1.99 % June 2025 June 2026
Class B $ 60,000,000 2.19 % June 2025 June 2026
Class C $ 67,500,000 2.63 % June 2025 June 2026
Class D $ 97,500,000 4.85 % June 2025 June 2026
Series 2022-2
Class A $ 525,000,000 2.33 % June 2027 June 2028
Class B $ 60,000,000 2.65 % June 2027 June 2028
Class C $ 67,500,000 2.95 % June 2027 June 2028
Class D $ 97,500,000 5.16 % June 2027 June 2028
The Series 2022-1 Class B Notes are subordinated to the Series 2022-1 Class A
Notes. The Series 2022-1 Class C Notes are subordinated to the Series 2022-1
Class A Notes and the Series 2022-1 Class B Notes. The Series 2022-1 Class D
Notes are subordinated to the Series 2022-1 Class A Notes, the Series 2022-1
Class B Notes, and the Series 2022-1 Class C Notes.
The Series 2022-2 Class B Notes are subordinated to the Series 2022-2 Class A
Notes. The Series 2022-2 Class C Notes are subordinated to the Series 2022-2
Class A Notes and the Series 2022-2 Class B Notes. The Series 2022-2 Class D
Notes are subordinated to the Series 2022-2 Class A Notes, the Series 2022-2
Class B Notes, and the Series 2022-2 Class C Notes.
Unless an amortization event occurs, HVF III is not required to make any
principal payments on (i) the Series 2022-1 Notes until January 2025, and (ii)
the Series 2022-2 Notes until January 2027. Beginning in January 2025 for the
Series 2022-1 Notes and January 2027 for the Series 2022-2 Notes, HVF III is
expected to make a payment of one-sixth of the initial principal amount until
repayment is made in full on the applicable legal final payment date for such
series of notes in June 2026 and June 2028, respectively.
The occurrence and continuation of an amortization event related to the Series
2022 Notes may result in HVF III being required to pay principal on the Series
2022 Notes earlier than anticipated. Amortization events include, among other
things, the failure to pay principal or interest in a timely manner, the failure
to maintain sufficient assets compared to the outstanding amount of debt, the
failure to maintain sufficient liquidity in the form of reserve accounts or
letters of credit, the presence of certain liens on HVF III's assets, any
misrepresentations by HVF III, any covenant defaults and defaults by either HVF
III or THC, as administrator of HVF III under the Administration Agreement dated
as of June 29, 2021, which was previously filed as Exhibit 10.9 to the Current
Report on Form 8-K filed on July 7, 2021. In the event that one or more
amortization events occurs and is continuing, holders of the Series 2022 Notes
may force HVF III or BNYM on their behalf to sell vehicles and, if a default
occurs under the Master Motor Vehicle Operating Lease and Servicing Agreement
(HVF III) (the "Lease") dated as of June 29, 2021, which was previously filed as
Exhibit 10.8 to the Current Report on Form 8-K filed on July 7, 2021, the
holders of the Series 2022 Notes may force THC and/or DTG Operations, each as a
lessee under the Lease, to return vehicles for sale by HVF III. Proceeds of any
such sales made during the enforcement of remedies are required to repay the
Series 2022 Notes and any notes issued by HVF III in the future.
The proceeds of the Series 2022 Notes were used in part to repay the amounts
outstanding on HVF III's Series 2021-A Variable Funding Rental Car Asset Backed
Notes. Remaining funds are expected to be used for the future acquisition or
refinancing of vehicles to be leased under the Lease.
The foregoing descriptions of the Series 2022 Notes are qualified in their
entirety by reference to the complete terms and conditions of the Series 2022-1
Supplement and the Series 2022-2 Supplement, copies of which are attached hereto
as Exhibits 10.1 and 10.2, respectively, which are incorporated by reference
herein.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
Exhibit Number Title
10.1 Series 2022-1 Supplement, dated as of January 19, 2022, among
Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation,
as administrator, and The Bank of New York Mellon Trust Company,
N.A., as trustee
10.2 Series 2022-2 Supplement, dated as of January 19, 2022, among
Hertz Vehicle Financing III LLC, as issuer, The Hertz Corporation,
as administrator, and The Bank of New York Mellon Trust Company,
N.A., as trustee
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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