Long-term Debt and Borrowing Arrangements

Long-term and other borrowing arrangements consisted of:



		As of		As of
	Maturity Dates	June 30,		December 31,
	Maturity Dates	2013		2012
Floating rate notes ^(a)	May 2014	$	150	$	250
3½% convertible notes ^(c)	October 2014	75		128
Floating rate term loan ^{(b) (d)}	May 2016	47		49
4⅞% notes	November 2017	300		300
9⅝% notes	March 2018	—		446
8¼% notes	January 2019	730		730
Floating rate term loan ^{(b) (e)}	March 2019	994		689
9¾% notes	March 2020	224		250
6% Euro-denominated notes	March 2021	325		—
5½% notes	April 2023	500		—
		3,345		2,842
Other		71		63
Total		3,416		2,905
Less: Short-term debt and current portion of long-term debt		221		57
Long-term debt		$	3,195	$	2,848

__________


^(a)	As of June 30, 2013, the floating rate notes due 2014 bear interest at three-month LIBOR, plus 250 basis points, for an aggregate rate of 2.78%.

^(b)

The floating rate term loans are part of the Company’s senior credit facility, which also includes its revolving credit facility maturing 2016, and are secured by pledges of all of the capital stock of all of the Company’s direct or indirect domestic subsidiaries and 65% of the capital stock of each direct foreign subsidiary, subject to certain exceptions, and liens on substantially all of the Company’s intellectual property and certain other real and personal property.


^(c)	As of June 30, 2013, the 3½% convertible notes are convertible by the holders into approximately 5 million shares of the Company’s common stock.


^(d)	As of June 30, 2013, the floating rate term loan due 2016 bears interest at three-month LIBOR, plus 300 basis points, for an aggregate rate of 3.28%.


^(e)	As of June 30, 2013, the floating term rate loan due 2019 bears interest at the greater of three-month LIBOR or 0.75%, plus 225 basis points, for an aggregate rate of 3.00%.

In March 2013, the Company issued €250 million of 6% senior notes due 2021, at face value. The notes pay interest semi-annually on March 1 and September 1 of each year, beginning in September 2013. The notes are unsecured obligations of the Company’s Avis Budget Finance plc subsidiary, are guaranteed on a senior basis by the Company and certain of its domestic subsidiaries and rank equally with all of the Company’s existing senior unsecured debt. The Company has the right to redeem these notes in whole or in part on or after April 1, 2016 at specified redemption prices, plus any accrued and unpaid interest. The Company used the proceeds from the issuance to partially fund the acquisition of Zipcar.

In April 2013, the Company completed an offering of $500 million of 5½% senior notes due 2023. The notes were issued at par and pay interest semi-annually on April 1 and October 1 of each year, beginning on October 1, 2013. The notes are unsecured obligations of the Company’s Avis Budget Car Rental, LLC (“ABCR”) subsidiary are guaranteed on a senior basis by the Company and certain of its domestic subsidiaries and rank equally with all of the Company’s existing senior unsecured debt. The Company has the right to redeem these notes in whole or in part on or after April 1, 2018 at specified redemption prices, plus any accrued and unpaid interest.

In connection with the issuance of the 5½% senior notes due 2023, the Company completed a cash tender offer to purchase any and all of the outstanding $450 million 9⅝% notes due 2018 and a portion of its outstanding 9¾% notes due 2020. The tender offer expired in April 2013 and approximately $326 million in aggregate principal amount of the 9⅝% notes due 2018 and approximately $26 million of the aggregate principal amount of the 9¾% notes due 2020 were purchased by the Company for $398 million plus accrued interest. In June 2013, the Company redeemed the remaining $124 million principal amount of the 9⅝% notes due 2018 for $139 million plus accrued interest.

During the six months ended June 30, 2013, the Company twice amended its Amended and Restated Credit Agreement, dated as of May 3, 2011 (the “Credit Agreement”) to issue, in aggregate, an additional $300 million of term loan due 2019 (the “New Term Loan”). A portion of the proceeds were used to partially fund the acquisition of Zipcar. The New Term Loan has a committed aggregate principal amount of $1.0 billion and bears interest at the greater of three-month LIBOR or 0.75%, plus 225 basis points.

During the six months ended June 30, 2013, the Company repurchased approximately $53 million of its 3½% convertible notes for approximately $93 million, plus accrued interest, and repaid $100 million of its floating rate notes due 2014 at face value plus accrued interest.

In connection with debt amendments and repayments during the six months ended June 30, 2013, the Company recorded $131 million in debt extinguishment costs.

Committed Credit Facilities and Available Funding Arrangements

At June 30, 2013, the committed credit facilities available to the Company and/or its subsidiaries included:



	Total Capacity		Outstanding Borrowings		Letters of Credit Issued		Available Capacity
Revolving credit facility maturing 2016 ^(a)	$	1,500	$	—	$	1,069	$	431
Other facilities^(b)	12		2		—		10

__________

^(a)

This revolving credit facility matures in 2016 and bears interest of one-month LIBOR, plus 300 basis points. The Company’s senior credit facility, which encompasses the floating rate term loans due 2016 and 2019 and the revolving credit facility, is secured by pledges of all of the capital stock of all of the Company’s domestic subsidiaries and 65% of the capital stock of each direct foreign subsidiary, subject to certain exceptions, and liens on substantially all of the Company’s intellectual property and certain other real and personal property.


^(b)	These facilities encompass bank overdraft lines of credit, bearing interest of 4.50% to 5.80% as of June 30, 2013.

At June 30, 2013, the Company had various uncommitted credit facilities available, under which it had drawn approximately $50 million, which bear interest at rates between 0.44% and 8.22%.

The agreements governing the Company’s indebtedness contain restrictive covenants, including restrictions on dividends paid to the Company by certain of its subsidiaries, the incurrence of additional indebtedness by the Company and certain of its subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback transactions. The Company’s senior credit facility contains maximum leverage and minimum interest coverage ratio requirements. As of June 30, 2013, the Company was in compliance with the financial covenants of its senior credit facility.