Structured credit deal of the year: Hertz $4.3 billion LBO-related ABS
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Structured credit deal of the year: Hertz $4.3 billion LBO-related ABS

Securitization helped the winning sponsor group beat off competition and persuade Ford to sell.

At a glance:
Deal type:
Hertz Vehicle Financing $4.3 billion ABS; part funding of $15 billion buyout of Hertz.
Lead managers: Lehman Brothers, Deutsche Bank, JPMorgan, Merrill Lynch, Goldman Sachs
Date: December 2005

Buyout activity dominated the headlines on both sides of the Atlantic in 2005, but the use of structured finance on the refinancing of the purchase of the Hertz division from Ford gave this phenomenon a new dimension.

The pace of structured finance innovation has slowed of late, especially in areas other than CDOs, so the important developments tend to come about through inventive new applications. Hertz Vehicle Financing’s asset backed securitization is a good example of this and was instrumental in Clayton, Dubilier & Rice, the Carlyle Group and Merrill Lynch private equity winning control of the $15 billion company.

This was the biggest buyout of the year. In addition to running an auction for a sale of Hertz, Ford was also looking at the option of an IPO. Bankers involved with constructing the financing say that one of the main reasons why these sponsors managed to outbid another private equity group and exceed potential IPO proceeds was the use of securitization.

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