Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt

Debt

The Company's debt, including its available credit facilities, consists of the following ($ in millions) as of March 31, 2023 and December 31, 2022:

Facility	Weighted-Average Interest Rate as of March 31, 2023	Fixed or Floating Interest Rate	Maturity	March 31, 2023		December 31, 2022
Non-Vehicle Debt
Term B Loan	7.90%	Floating	6/2028	$	1,277	$	1,281
Term C Loan	7.90%	Floating	6/2028	245		245
Senior Notes Due 2026	4.63%	Fixed	12/2026	500		500
Senior Notes Due 2029	5.00%	Fixed	12/2029	1,000		1,000
First Lien RCF	N/A	Floating	6/2026	—		—
Other Non-Vehicle Debt(1)	7.64%	Fixed	Various	8		9
Unamortized Debt Issuance Costs and Net (Discount) Premium				(55)		(58)
Total Non-Vehicle Debt				2,975		2,977
Vehicle Debt
HVF III U.S. ABS Program
HVF III U.S. Vehicle Variable Funding Notes
HVF III Series 2021-A Class A(2)	6.35%	Floating	6/2024	2,452		2,363
HVF III Series 2021-A Class B(2)	3.65%	Fixed	6/2023	188		188
				2,640		2,551
HVF III U.S. Vehicle Medium Term Notes
HVF III Series 2021-1(2)	1.66%	Fixed	12/2024	2,000		2,000
HVF III Series 2021-2(2)	2.12%	Fixed	12/2026	2,000		2,000
HVF III Series 2022-1(2)	2.44%	Fixed	6/2025	750		750
HVF III Series 2022-2(2)	2.42%	Fixed	6/2027	652		652
HVF III Series 2022-3(2)	3.89%	Fixed	3/2024	383		383
HVF III Series 2022-4(2)	4.22%	Fixed	9/2025	667		667
HVF III Series 2022-5(2)	4.03%	Fixed	9/2027	317		317
HVF III Series 2023-1(2)	5.91%	Fixed	6/2026	460		—
HVF III Series 2023-2(2)	6.30%	Fixed	9/2028	300		—
				7,529		6,769
Vehicle Debt - Other
Repurchase Facility	6.55%	Fixed	4/2023	114		86
European ABS(2)	4.65%	Floating	11/2024	843		811
Hertz Canadian Securitization(2)	6.51%	Floating	6/2024	288		283
Australian Securitization(2)	5.28%	Floating	4/2024	159		168
New Zealand RCF	7.78%	Floating	6/2024	50		54
U.K. Financing Facility	6.60%	Floating	4/2023-3/2027	113		101
U.K. Toyota Financing Facility	2.20%	Floating	4/2023-11/2023	37		49

Facility	Weighted-Average Interest Rate as of March 31, 2023	Fixed or Floating Interest Rate	Maturity	March 31, 2023		December 31, 2022
Other Vehicle Debt	3.33%	Floating	4/2023 - 2/2027	78		76
				1,682		1,628
Unamortized Debt Issuance Costs and Net (Discount) Premium				(62)		(62)
Total Vehicle Debt				11,789		10,886
Total Debt				$	14,764	$	13,863

(1)Other non-vehicle debt is primarily comprised of $5 million and $6 million in finance lease obligations as of March 31, 2023 and December 31, 2022, respectively.

(2)Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal final maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness originally expect the outstanding principal of the relevant indebtedness to be repaid in full. The legal final maturity date is the date on which the outstanding principal of the relevant indebtedness is legally due and payable in full.

Non-vehicle Debt

First Lien Credit Agreement

In March 2023, Hertz increased the aggregate committed amount of the First Lien RCF from $1.9 billion to $2.0 billion.

Vehicle Debt

HVF III U.S. ABS Program

HVF III Series 2023-1 Notes: In March 2023, Hertz issued the Series 2023-1 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $500 million. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Class D Notes in an aggregate principal amount of $40 million, and accordingly, the related principal amount is eliminated in consolidation as of March 31, 2023.

HVF III Series 2023-2 Notes: In March 2023, Hertz issued the Series 2023-1 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $300 million.

There is subordination within each of the preceding series based on class.

Vehicle Debt-Other

Repurchase Facilities

Beginning in 2022, Hertz entered into and in the future may enter into repurchase agreements related to retained HVF III Series Notes (the "Repurchase Facilities"), whereby Hertz can sell and repurchase at a pre-determined price any of the retained HVF III Series Notes. Transactions occurring under the Repurchase Facilities are based on mutually agreeable terms and prevailing rates. As of March 31, 2023, transactions totaling $114 million were outstanding under Repurchase Facilities.

New Zealand RCF

In March 2023, Hertz New Zealand Holding Limited, an indirect, wholly-owned subsidiary of Hertz, amended its credit agreement to extend its seasonal commitment period and provide for aggregate maximum borrowings of

NZD$80 million with step downs in committed capacity through May 2023. Following the expiration of the seasonal commitment period, aggregate maximum borrowings will revert to NZD$60 million.

Borrowing Capacity and Availability

Borrowing capacity and availability comes from the Company's revolving credit facilities, which are a combination of variable funding asset-backed securitization facilities, cash-flow based revolving credit facilities, asset-based revolving credit facilities and the First Lien RCF. Creditors under each such asset-backed securitization facility and asset-based revolving credit facility have a claim on a specific pool of assets as collateral. With respect to each such asset-backed securitization facility and asset-based revolving credit facility, the Company refers to the amount of debt it can borrow given a certain pool of assets as the borrowing base.

The Company refers to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., with respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the amount of debt the Company could borrow assuming it possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility and, in the case of the First Lien RCF, less any issued standby letters of credit. With respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the Company refers to "Availability Under Borrowing Base Limitation" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt that can be borrowed given the collateral possessed at such time).

The following facilities were available to the Company as of March 31, 2023 and are presented net of any outstanding letters of credit:

(In millions)	Remaining Capacity		Availability Under Borrowing Base Limitation
Non-Vehicle Debt
First Lien RCF	$	1,512	$	1,512
Total Non-Vehicle Debt	1,512		1,512
Vehicle Debt
HVF III Series 2021-A	1,267		—
European ABS	350		—
Hertz Canadian Securitization	—		—
Australian Securitization	8		—
U.K. Financing Facility	10		3
U.K. Toyota Financing Facility	14		2
Total Vehicle Debt	1,649		5
Total	$	3,161	$	1,517

Letters of Credit

As of March 31, 2023, there were outstanding standby letters of credit totaling $749 million comprised primarily of $245 million issued under the term loan "C" facility (the "Term C Loan") and $488 million issued under the First Lien RCF. As of March 31, 2023, no capacity remains to issue letters of credit under the Term C Loan. Such letters of credit have been issued primarily to provide credit enhancement for the Company's asset-backed securitization facilities and to support the Company's insurance programs, as well as to support the Company's vehicle rental concessions and leaseholds. As of March 31, 2023, none of the issued letters of credit were drawn.

Pledges Related to Vehicle Financing

Substantially all of the Company's revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of the lenders under the various credit facilities, other secured financings or asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing III LLC and various other domestic and international subsidiaries that facilitate the Company's international securitizations) will be available to satisfy the claims of unsecured creditors unless the secured creditors are paid in full.

The Company has a 25% ownership interest in IFF No. 2, whose sole purpose is to provide commitments to lend under the European ABS in various currencies subject to borrowing bases comprised of revenue earning vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. IFF No. 2 is a VIE and the Company is the primary beneficiary; therefore, the assets, liabilities and results of operations of IFF No. 2 are included in the accompanying unaudited condensed consolidated financial statements. As of March 31, 2023 and December 31, 2022, IFF No. 2 had total assets of $1.4 billion and $1.3 billion, respectively, comprised primarily of intercompany receivables, and total liabilities of $1.4 billion and $1.3 billion, respectively, comprised primarily of debt.

Covenant Compliance

The First Lien RCF credit agreement (the "First Lien Credit Agreement") requires Hertz to comply with the following financial covenant: a First Lien Ratio of less than or equal to 3.00 to 1.00 in the first and last quarters of the calendar year and 3.50 to 1.00 in the second and third quarters of the calendar year. The financial covenant was effective beginning in the third quarter of 2021. As of March 31, 2023, Hertz was in compliance with the First Lien Ratio.

In addition to the financial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and the granting of security interests for the benefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement also contains customary negative covenants, including, among other things, restrictions on the incurrence of liens, indebtedness, asset dispositions and restricted payments. As of March 31, 2023, the Company was in compliance with all covenants in the First Lien Credit Agreement.