What is Avis Budget Rental Car Funding and what is its relationship to Budget?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
• | |
Includes $751 million and $841 million of Class R notes as of December 31, 2024 and December 31, 2023, respectively, which are held by us. Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of December 31, 2024 and 2023 were $60 million and $61 million, respectively.
Debt due to Avis Budget Rental Car Funding. Avis Budget Rental Car Funding, an unconsolidated bankruptcy remote qualifying special purpose limited liability company, issues privately placed notes to investors as well as to banks and bank-sponsored conduit entities. Avis Budget Rental Car Funding uses the proceeds from its note issuances to make loans to our wholly-owned subsidiary, AESOP Leasing investors as well as to banks and bank-sponsored conduit entities. Avis Budget Rental Car Funding basis. AESOP Leasing is required to use the proceeds of such loans to acquire or finance the acquisition of vehicles used in our rental car operations. By issuing debt through the Avis Budget Rental Car Funding program, we pay a lower rate of interest than if we had issued debt directly to third parties. Avis Budget Rental Car Funding is not consolidated, as we are not the primary beneficiary" of Avis Budget Rental Car Funding. We determined that we are not the primary beneficiary because we do not have the obligation to absorb the potential losses or receive the benefits of "primary beneficiary" of Avis Budget Rental Car Funding's activities since our only significant source of variability in the earnings, losses or cash flows of Avis Budget Rental Car Funding is exposure to our own creditworthiness, due our form Avis Budget Rental Car Funding. Because Avis Budget Rental Car Funding is not consolidated. As SoD Leasing's loan obligations to Avis Budget Rental Car Funding are reflected as related to our loan from Avis Budget Rental Car Funding is not consolidated. As SoD Leasing is consolidated balance Sheets which represents securities issued to us by Avis Budget Rental Car Funding. AESOP Leasing is consolidated, as we are the "primary beneficiary" of AESOP Leasing; as a result, the vehicles purchased by AESOP Leasing remain on our Consolidated Balance Sheets which represents securities issued to us by Avis Budget Rental Car Funding. AESOP Leasing's activities, an obligation to absorb a majority of its expected losses and t
on our Consolidated Balance Sheets within assets under vehicle programs and liabilities under vehicle programs, respectively. The assets of AESOP Leasing, included within assets under vehicle programs (excluding the investment in Avis Budget Rental Car Funding (AESOP) LLC—related party) are restricted. Such assets may be used only to repay the respective AESOP Leasing liabilities, included within Liabilities under vehicle programs, and to purchase new vehicles, although if certain collateral coverage requirements are met, AESOP Leasing may pay dividends from excess cash. The creditors of AESOP Leasing and Avis Budget Rental Car Funding have no recourse to our general credit. We periodically provide Avis Budget Rental Car Funding with non-contractually required support, in the form of equity and loans, to serve as additional collateral for the debt issued by Avis Budget Rental Car Funding.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Avis Budget Rental Car Funding (AESOP) LLC is a special purpose, bankruptcy remote limited liability company created to finance vehicle acquisitions for Budget's rental car operations. It issues privately placed notes to investors, banks, and bank-sponsored entities and then uses the proceeds to make loans to AESOP Leasing, a wholly-owned subsidiary of Budget. AESOP Leasing then uses these funds to acquire or finance the acquisition of vehicles for Budget's rental car operations.
Budget uses Avis Budget Rental Car Funding as a way to obtain a lower interest rate on debt than if it issued the debt directly to third parties. As a bankruptcy remote entity, Avis Budget Rental Car Funding's creditors have no recourse to Budget's general credit. Budget periodically provides Avis Budget Rental Car Funding with support in the form of equity and loans to serve as additional collateral for the debt issued by Avis Budget Rental Car Funding.
Because Budget is not the primary beneficiary of Avis Budget Rental Car Funding, its financial results are not consolidated within Budget's financial statements. However, Budget does hold Class R notes issued by Avis Budget Rental Car Funding, with $751 million and $841 million held as of December 31, 2024, and December 31, 2023, respectively. Deferred financing fees related to debt due to Avis Budget Rental Car Funding were $60 million and $61 million as of December 31, 2024 and 2023, respectively.
In September 2024, Budget entered into a repurchase agreement (the "Repurchase Facility"), allowing it to sell its Class D notes issued by Avis Budget Rental Car Funding to a counterparty and repurchase them. As of December 31, 2024, $116 million was outstanding under this facility, with interest at 6.64%, and $195 million of securities were pledged as collateral, included within investment in Avis Budget Rental Car Funding (AESOP) LLC—related party on Budget's Consolidated Balance Sheets.