Aug. 7–ANC Rental Corp. moved a step closer to becoming the property of a New York hedge fund on Wednesday when U.S. Bankruptcy Court Judge Mary Walrath approved the sale of most of ANC’s assets toCerberus Capital Management.
Cerberus would pay $230 million and assume $60 million of nonvehicle debt in exchange for the non-European operations of ANC, the Fort Lauderdale-based parent company of Alamo Rent A Car and National Car Rental System.
The deal is expected to close by Sept. 30.
Without a sale, the $2.4 billion company was headed for liquidation, ANC has said in court filings in its bankruptcy case. In addition to the sales price, Cerberus has pledged a line of credit for ANC of up to $150 million.
“What it really means is there is a future, as opposed to not knowing,” said William Plamondon, current ANC chief executive.
In a statement, Cerberus said it was pleased by the judge’s approval.
“We are looking forward to rebuilding the brands,” spokesman Dick Auletta said.
The New York firm, which takes positions in troubled companies on behalf of institutions and wealthy investors, has about $8 billion in capital at work in various turnaround plays, such as Fila, the Italian sportswear brand, and Baan, a Dutch software concern.
ANC filed for Chapter 11 bankruptcy in November 2001, after the Sept. 11 attacks doomed attempts to recapitalize the troubled car rental giant. Plans to revive ANC in bankruptcy by consolidating the operations of Alamo and National were undercut by a continued weak climate for travel.
Ironically, travel may be picking up now that ANC is ready for sale. “We’re having a great summer,” Plamondon said.
A group that may not be celebrating the Cerberus buyout is the committee of unsecured creditors at ANC, which includes names like General Motors, Walt Disney World and Perot Systems. It stands to gain little from ANC’s sale. Most of the proceeds from the deal are earmarked for secured creditors such as Lehman Bros and Liberty Mutual Insurance Co.
Plamondon said there were several unexpected objections to the sale filed by Liberty at Wednesday’s hearing, but they were resolved. “I think we’ll have a consensual final order” approving the sale, Plamondon said.
Cerberus has said it plans to hire William Lobeck to run the daily operations of ANC, replacing Plamondon, who may be offered a senior executive position. Lobeck ran National when it was acquired by Republic Services in 1997 for $600 million in stock and $1.7 billion in assumed debt. It joined Alamo, which Republic bought in 1996 for $625 million.
Republic later became AutoNation, which spun off Alamo, National and a third smaller brand as ANC Rental Corp. in 2000.
ANC employs about 1,700 people in South Florida and about 11,400 worldwide. It holds about 22 percent of the rental car market.
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