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Avis Budget Modifies Credit Facility to Improve Liquidity

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Vehicle rental & leasing services provider Avis Budget Group, Inc. (CAR - Free Report) recently amended its existing credit facility to improve its financial flexibility and augment liquidity. The modified credit agreement is likely to provide the requisite wherewithal to undertake strategic investments for steady organic and inorganic growth of the company.

The amended credit facility increases Avis Budget’s borrowing capacity by $188 million. The modified credit agreement also extended the debt maturity by three years to 2022 and reduced annual interest burden by $5 million. The company presently has $1.15 billion of outstanding term loans, scheduled for maturity in Mar 2022.

Avis Budget’s strategy entails growth through acquisitions. The company expects to extend its global footprint as well as strengthen its position in existing markets through successful integration of these companies and organic growth across the industry verticals. The increased liquidity is likely to boost this corporate objective of Avis Budget.

At the same time, in a concerted effort to reduce its outstanding debt, Avis Budget completed a private offering of €250.0 million in aggregate principal amount of Senior Notes due 2025. The company intends to utilize the proceeds from the note offering to reduce its existing debt. This includes the redemption of all its outstanding euro-denominated 6% Senior Notes due 2021 and a portion of its dollar-denominated Senior Notes due 2017.

Avis Budget has performed in line with the Zacks categorized Business Services industry in the last six months. We envision strong U.S. demand trends for Avis Budget as travel volumes continue to perform well. Anticipating strong travel trends for both leisure and commercial travelers and projecting sustained expansion of these trends, we believe that Avis Budget’s various acquisitions and purchase of other licensees will enhance its operational foothold in global markets. An improved financial flexibility through an amended credit agreement is expected to supplement such initiatives of the company.



Avis Budget currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Liberty Tax, Inc. , Sajan, Inc. and CGI Group Inc. (GIB - Free Report) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Liberty Tax has a long-term earnings growth expectation of 17.5%.

Sajan has a long-term earnings growth expectation of 25%.

CGI Group has a long-term earnings growth expectation of 8%.

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