Say hello to the new ANC Rental Corp. - or rather, say hello to Vanguard Car Rental USA, the freshly formed entity that bought ANC's assets, including its subsidiary brands Alamo Rent a Car and National Car Rental, out of bankruptcy.
The rental car concern is a headliner once again, with a uniquely structured rental fleet lease deal to be completed sometime this week. Vanguard is essentially the shell set up by Cerberus Capital Management to be the new corporate parent. Cerberus, a hedge fund/private equity buyout firm, owns the majority stake in Vanguard.
The current ARG Funding 2003-1 deal, via Lehman Brothers with CDC Ixis Capital Markets as co-manager, is $700 million in size and is being marketed in three two-year classes, with talk on the triple-A floaters at 50 over one-month Libor.
The deal is largely backed by General Motors program vehicles, and features a unique freeze agreement, where GM will freeze depreciation on a large portion of the fleet for sixth months in the event of seller bankruptcy. Essentially, GM is taking Vanguard risk. As such, the investor is taking on GM risk, and the junior notes in the transaction are strongly linked to GM.
Perhaps one of the best ABS stories over the past two years, ANC Rental was able to complete a one-of-a-kind securitization while in bankruptcy - a deal that acted as debtor-in-possession financing, led by a highly creative Deutsche Bank Securities, in 2002.
Interestingly, while bankruptcy itself is generally an early amortization trigger in rental car deals, ANC's 2002 deal featured a trigger on emergence-from-bankruptcy. The deal began paying down when Cerberus took the reigns of ANC in June of this year.
Cerberus itself has become a quasi celebrity name in ABS, having taken part in the bankruptcy proceedings of Conseco Finance and DVI, Inc., to name a few.
A return to ABS was not at all surprising, as during the June winding down, sources told ASR, "Cerberus is an experienced buyout firm and they'd want to make sure that, if they win the bidding, the rug doesn't get pulled from under them. I don't think Cerberus would even get involved just to find out that they are cut off from funding." (see ASR 6/23)