(The following statement was released by the rating agency)
Oct 10 - Standard & Poor's Ratings Services said today that it has assignedits 'BBB+' issue rating to ERAC USA Finance LLC's notes, rule 144A offeringswithout registration rights. ERAC's parent, Enterprise Holdings Inc., guaranteesthe notes. The company will use proceeds for general corporate purposes,including repayment of debt.
The ratings on St. Louis-based Enterprise and ERAC, Enterprise's wholly ownedfinance subsidiary, reflect Enterprise's leading market position in therelatively stable off-airport (replacement and local) segment of the carrental industry, good earnings, and cash flow generation. Enterprise (parentof Enterprise Rent-A-Car, Alamo Rent-A-Car, and National Car Rental) is thelargest global car rental company, although most of its operations are basedin the U.S., with $14.1 billion of revenues in fiscal 2011 (ended July 31).
Despite expected pressure on earnings and cash flow because of higher vehicleprices, we expect Enterprise's financial profile to remain relativelyconsistent through 2013, with funds from operation (FFO) to debt averaging inthe mid- to high-40% area over that period. We could raise ratings if demandis stronger or prices on new vehicles are lower than we currently expect,resulting in FFO to debt of more than 50% on a sustained basis. We areunlikely to lower ratings. However, we could if FFO to debt declined to themid-30% area for a sustained period, for example because of significantlyweaker demand associated with reduced airline travel, or if the used carmarket declined to the depressed levels of late 2008 to early 2009, resultingin losses on sales of vehicles.
RELATED CRITERIA AND RESEARCH
-- Summary: Enterprise Holdings Inc., Sept. 25, 2012
-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
RATINGS LISTEnterprise Holdings Inc.Corporate credit rating BBB+/Stable/A-2Ratings AssignedERAC USA Finance LLCSenior unsecured notes BBB+
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