Avis Budget Group Strengthens Presence in Fast-Growing Brazilian Car Rental
PARSIPPANY, N.J., Aug. 12, 2013 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc.
(Nasdaq:CAR) announced today that is has agreed to acquire a 50% ownership
stake in its existing Brazilian licensee. This investment of approximately $50
million will enable the Company to significantly increase the presence of its
Avis and Budget brands in the fast-growing Brazilian car rental market, and to
capture a larger share of Brazil's domestic, international-inbound and
international-outbound vehicle rental spend.
"Expanding our global footprint and increasing our presence in faster-growing
markets are two of our key strategic growth initiatives, and investing in
South America's largest economy is consistent with these goals," said Ronald
L. Nelson, Avis Budget Group Chairman and Chief Executive Officer.
Avis has operated in Brazil since 1978. The Company's licensee in Brazil has
operated the Avis brand there since 2003 and the Budget brand since 2005, and
generated rental revenues of approximately $50 million in 2012. Avis and
Budget provide vehicle leasing and vehicle rental services with a fleet of
more than 4,000 cars in Brazil, and operate more than 40 rental locations,
including at Congonhas and Guarulhos airports in Sao Paulo, at Santos Dumont
and Galeão airports in Rio de Janiero, at other airports and off-airport in
major metropolitan markets.
"This investment will enable us to substantially expand our Brazilian fleet
and capture a larger share of this rapidly expanding car rental market," said
Patric Siniscalchi, Avis Budget Group President, Latin America/Asia Pacific.
"In addition, by seizing the opportunity now to increase our presence in this
market, we will be able to leverage our licensee's established presence and
substantially increase the awareness and visibility of our brands."
The Brazilian car rental market is expected to reach $4 billion in annual
revenue by 2016, representing a 13% compound annual growth rate since 2008.
Going forward, growth is expected to be driven by increases in both domestic
and international tourism, including the 2014 FIFA World Cup and the 2016
Olympic Games, growth in business travel spending, improvements in airport
infrastructure and improved access to long-term financing.In addition, total
business travel spending in Brazil is expected to grow at more than 10% per
year, with international-outbound business travel spending growing 20% in 2013
alone, according to the Global Business Travel Association.
"Avis Budget Group's investment demonstrates their commitment to having a
strong and robust competitive presence in Brazil," said Afonso Celso de Barros
Santos, President, Grupo Dallas, Avis Budget Group's Brazil licensee."It also
is a sign of their ongoing support for our partnership as the best way to
achieve this goal, and so we are proud and excited to move forward under this
In conjunction with the investment, Avis Budget Group expects to record an
impairment charge of approximately $30 million in the third quarter, primarily
related to its licensee's pre-existing debt. The Company will account for its
investment under the equity method.
Although most of Avis Budget Group's licensees in various parts of the world
are independently-owned, Avis Budget Group holds ownership stakes in certain
licensees, including its licensees for China and India.
About Avis Budget Group, Inc.
Avis Budget Group, Inc. is a leading global provider of vehicle rental
services, both through its Avis and Budget brands, which have more than 10,000
rental locations in approximately 175 countries around the world, and through
its Zipcar brand, which is the world's leading car sharing network, with more
than 810,000 members.Avis Budget Group operates most of its car rental
offices in North America, Europe and Australia directly, and operates
primarily through licensees in other parts of the world.Avis Budget Group has
approximately 30,000 employees and is headquartered in Parsippany, N.J.More
information is available at www.avisbudgetgroup.com.
Certain statements in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Statements preceded by, followed by or that
otherwise include the words "believes", "expects", "anticipates", "intends",
"projects", "estimates", "plans", "may increase", "forecast" and similar
expressions or future or conditional verbs such as "will", "should", "would",
"may" and "could" are based upon then current assumptions and expectations and
are generally forward-looking in nature and not historical facts. Any
statements that refer to outlook, expectations or other characterizations of
future events, circumstances or results, including all statements related to
future results, future growth rates or market opportunities are also
Various risks that could cause future results to differ from those expressed
by the forward-looking statements included in this press release include, but
are not limited to, the Company's ability to promptly and effectively
integrate the businesses of Zipcar and Avis Budget, any change in economic
conditions generally, particularly in Brazil or in key market segments, the
high level of competition in the vehicle rental industry, a change in our
fleet costs as a result of a change in the cost for new vehicles and/or the
value of used vehicles, disruption in the supply of new vehicles, disposition
of vehicles not covered by manufacturer repurchase programs, the financial
condition of the manufacturers that supply our rental vehicles which could
impact their ability to perform their obligations under our repurchase and/or
guaranteed depreciation arrangements, any reduction in travel demand,
including any reduction in airline passenger traffic, any occurrence or threat
of terrorism, a significant increase in interest rates or borrowing costs, our
ability to obtain financing for our operations, including the funding of our
vehicle fleet via the asset-backed securities market, any changes to the cost
or supply of fuel, any fluctuations related to the mark-to-market of
derivatives which hedge our exposure to exchange rates, interest rates and
fuel costs, the Company's ability to meet the financial and other covenants
contained in the agreements governing our indebtedness, risks associated with
litigation, regulation or governmental or regulatory inquiries or
investigations involving the Company, and the Company's ability to accurately
estimate its future results and implement its strategy for cost savings and
growth. Other unknown or unpredictable factors could also have material
adverse effects on Avis Budget Group's performance or achievements. In light
of these risks, uncertainties, assumptions and factors, the forward-looking
events discussed in this press release may not occur. You are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of the date stated, or if no date is stated, as of the date of this press
release. Important assumptions and other important factors that could cause
actual results to differ materially from those in the forward-looking
statements are specified in Avis Budget Group's Annual Report on Form 10-K for
the year ended December 31, 2012 and its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2013, included under headings such as "Forward-Looking
Statements", "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and in other filings and
furnishings made by the Company with the SEC from time to time. Except for
the Company's ongoing obligations to disclose material information under the
federal securities laws, the Company undertakes no obligation to release
publicly any revisions to any forward-looking statements, to report events or
to report the occurrence of unanticipated events unless required by law.
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