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Hertz prices shares for public offering

October 28, 2006|From the Associated Press

NEWARK, N.J. — Less than a year after being taken private, Hertz Global Holdings Inc. is making preparations to go public again.

Underwriters set a pricing range Friday for the car rental company's upcoming initial public offering of 88.2 million shares of $16 to $18 per share.

The shares being sold would amount to a 27.5% stake in the company. At $18 a share, the sale would raise nearly $1.59 billion.

Hertz, which operates car rental businesses at about 7,600 locations in 145 countries, will trade under "HTZ" on the New York Stock Exchange.

Park Ridge, N.J.-based Hertz was purchased in December from Ford Motor Co. for $5.6 billion in cash and an assumption of $10 billion in debt by a group of private equity companies including Clayton, Dubilier & Rice Inc.; Carlyle Group; and Merrill Lynch Global Private Equity.

The sale prompted Fitch Ratings to downgrade Hertz's debt rating to "junk" status, where it should remain, Fitch analyst Christopher D. Wolfe said Friday.

In a form filed Friday with the Securities and Exchange Commission, Hertz stated, "We believe that we have significant opportunities for growth within our global car rental business that will allow us to sustain growth rates in this business consistent with historical levels."

A Fitch report this month on the rental car industry, however, said that although the business has recovered from the travel slowdown following the Sept. 11, 2001, terrorist attacks, other challenges are affecting profitability.

"The financial deterioration of U.S. vehicle manufacturers and rising interest rates have combined to produce growing fleet expenses, depreciation rates and funding costs, only a portion of which have been passed on to the renter," the Fitch report said.

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