Dollar Thrifty Automotive Group Update on Chrysler Exposure
Chrysler Group LLC assumes obligations
Tulsa, Okla., // PRNewswire-FirstCall // -- Dollar Thrifty Automotive Group, Inc. (NYSE: DTG) provided an update on its credit exposure to Chrysler LLC, which has declined significantly due to payments received since the commencement of the Chrysler LLC's bankruptcy proceeding and its successful asset sale. As previously announced, the Company's primary credit exposure to Chrysler relates to residual value guarantees on program vehicles in the Company's rental fleet, as well as on program vehicles that had previously been returned to auction.
In connection with the completion of the sale of substantially all of the assets of Chrysler LLC to Chrysler Group LLC ("Chrysler Group"), Chrysler Group has agreed, as stated in the bankruptcy court order approving the sale, to assume certain liabilities of Chrysler LLC, including liabilities under residual value guarantees and rebate bonuses offered to fleet customers prior to the closing of the sale with respect to vehicles subject to guaranteed depreciation programs. Based on the assumption of this liability by Chrysler Group, the Company believes that its primary exposure will be fully honored and settled in the ordinary course of business.
As of June 10, 2009, the Company's exposures were as follows:
- Approximately $6.4 million in trade receivables under incentive and vehicle repurchase programs.
- Approximately $250,000 in estimated exposure for residual value guarantees on approximately 40 program vehicles that have been returned to auction but not yet sold.
- Approximately $23 million in estimated exposure for residual value guarantees on approximately 3,600 program vehicles currently in the Company's rental fleet. These vehicles are subject to return to auction in the third and fourth quarters of 2009.
"We are very pleased that Chrysler completed its asset sale in a way that will allow Chrysler Group and Dollar Thrifty to continue to benefit from our long-term association. The removal of this uncertainty is of significant benefit to Dollar Thrifty and all of our stakeholders," said Scott L. Thompson, President and Chief Executive Officer. "We are particularly pleased that the sale process was handled in such a timely way that we have not experienced a negative impact on the residual values of Chrysler products. We look forward to continuing our relationship and expect to be working closely with Chrysler Group in the near future."
Dollar Thrifty separately confirmed that it does not have any material exposure to General Motors.
About Dollar Thrifty Automotive Group, Inc.
Dollar Thrifty Automotive Group, Inc. is a Fortune 1000 company headquartered in Tulsa, Oklahoma. Driven by the mission "Value Every Time," the Company's brands, Dollar Rent A Car and Thrifty Car Rental, serve value-conscious travelers in over 70 countries. Dollar and Thrifty have over 700 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. and Canadian airport markets. The Company's approximately 6,800 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network.
This press release contains "forward-looking statements" about our expectations, plans and performance. These statements use such words as "may," "will," "expect," "believe," "intend," "should," "could," "anticipate," "estimate," "forecast," "project," "plan" and similar expressions. These statements do not guarantee future performance and Dollar Thrifty Automotive Group, Inc. assumes no obligation to update them. Risks and uncertainties that could materially affect future results include the impact of persistent pricing and demand pressures, particularly in light of the continuing volatility in the global financial markets, constrained credit markets and concerns about global economic prospects, which have continued to depress consumer confidence and spending levels and could affect the ability of our customers to meet their payment obligations to us; the financial impact on the U.S. automotive industry and the economy as a whole of a bankruptcy or significant restructuring of GM; the availability and impact of further federal initiatives to stabilize the U.S. automotive industry; the impact of pricing and other actions by competitors, particularly if demand deteriorates further; airline travel patterns, including further disruptions or reductions in air travel resulting from airline bankruptcies, industry consolidation, capacity reductions and pricing actions; the cost and other terms of acquiring and disposing of automobiles and the impact of current adverse conditions in the used car market on our ability to reduce our fleet capacity as and when projected by our plans; our ability to manage our fleet mix to match demand and reduce vehicle depreciation costs, particularly as we increase the level of Non-Program Vehicles (those without a guaranteed residual value) and our exposure to the used car market; volatility in gasoline prices; our ability to obtain cost-effective financing as needed without unduly restricting operational flexibility, particularly if global economic conditions deteriorate further; our ability to comply with financial covenants or to obtain necessary amendments or waivers, and the impact of the terms of those amendments, such as potential reductions in lender commitments; our ability to manage the consequences under our financing agreements of a default by any of the Monolines that provide credit support for our asset backed financing structures; whether counterparties under our derivative instruments will continue to perform as required; whether ongoing governmental and regulatory initiatives in the United States and elsewhere to stabilize the financial markets will be successful; the effectiveness of other actions we take to manage costs and liquidity and whether further reductions in the scope of our operations will be necessary; disruptions in information and communication systems we rely on, including those relating to methods of payment; access to reservation distribution channels; the cost of regulatory compliance and the outcome of pending litigation; local market conditions where we and our franchisees do business, including whether franchisees will continue to have access to capital as needed; and the impact of natural catastrophes and terrorism. Forward-looking statements should be considered in light of information in this press release and other filings with the Securities and Exchange Commission.
SOURCE: Dollar Thrifty Automotive Group, Inc.