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Avis Extends $2B RCF Maturity to 2031, Adds $200M RCF Due 2028 Subject to Springing Maturity Based on Legal Settlement Proceeds

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✨ Summary by AI at Octus
Last week, Avis refinanced its $2 billion RCF due December 2028 with a new $2 billion RCF due in June 2031 and a $200 million RCF due in June 2028.
Credit Research: Krishan Sutharshana, CFA

Last week, Avis refinanced its $2 billion RCF due December 2028 with a new $2 billion RCF due in June 2031 and a $200 million RCF due in June 2028. Both new RCFs are subject to springing maturities if more than $300 million in principal amount of any term loans or senior unsecured notes are outstanding 91 days prior to their respective maturity dates.

Importantly, the new $200 million RCF due 2028 is also subject to a springing maturity on the date that is 10 business days after Avis receives cash proceeds from any legal settlement in excess of $500 million. Avis disclosed last month that it entered into a $650 million cash settlement with Pentwater to resolve a short-swing profits lawsuit it had filed a few days earlier.

The company’s $2 billion RCF was undrawn as of March 31, but had $1.6 billion in letters of credit outstanding, leaving only $387 million of availability. In late May, Avis issued $300 million of add-on 8% senior notes due 2031 to redeem a portion of its 5.75% senior notes due 2027, leaving it with only $350 million of corporate debt maturities through the end of 2027.

Avis’ capital structure, pro forma for these transactions as of March 31, is shown below.
 

As we previously analyzed, the full realization of $650 million of cash settlement proceeds from Pentwater this year could reduce Avis’ pro forma net corporate leverage by nearly one turn on an LTM basis. It could also help the company hit its target net corporate leverage of below 6x by year end, even if Avis doesn’t meet the midpoint of its adjusted EBITDA outlook of $925 million, which is 24% higher than the 2025 figure.
 

Although Avis’ adjusted EBITDA declined 22% year over year in the first quarter, management said it exceeded its adjusted EBITDA plan by approximately $50 million, supported by improved pricing and disciplined fleet execution. The company also raised its 2026 adjusted EBITDA guidance midpoint to $925 million from $900 million.

However, competitor Hertz disclosed in late June that it expected adjusted corporate EBITDA to be on the lower end of its guidance range amid “current unexpected softness” in the used car market that caused it to realize losses on the sale of vehicles in May compared with gains in April. Since that announcement, Avis’ stock has dropped by 17% to $158 per share at the time of publication, according to Yahoo Finance.

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