Shares in Avis Budget rise on refinancing approval

The Avis Budget Group, America’s third-larges rental car company, saw its share rise by 34 percent in New York trading after it was announced that banks renewed their financing commitments which the firm required in order to purchase new cars.

Shares in Avis climbed 75 cents, up 19 cents, late Tuesday afternoon. Over the course of 2008, shares in the company have dropped sharply, by 94 percent.

Rental car customers, feeling the pinch of the financial crisis, have cut back on their travel, at a time when automobile manufacturers have been raising prices. Hertz, second in size in the U.S. to Enterprise Rent-A-Car, may find itself with a financing problem as well if the economy doesn’t improve in the near future, according to New York-based Standard & Poor’s bond analyst, Betsy Snyder.

The refinancing commitment “buys Avis time until things recover in the economy,” said Snyder during an interview on December 16. “Without it, the worst-case scenario was liquidation at a time when the used-car market is already bad.”

Avis extended its main asset-backed loan facility maturity date by 60 days, back in October. In addition, the rental car operator has reduced its workforce by more than 2,200 jobs, frozen the salaries of management and shut down locations that were under-performing, in an effort to cost operating costs by $200 million annually - by mid 2009.

Thanks to www.bloomberg.com for the above quotes, for more information on this article please visit their website.

www.avisbudgetgroup.com