What are the primary components of 'restricted cash and cash equivalents' for Dollar Rent A Car?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
Restricted cash and cash equivalents include cash and cash equivalents that are not readily available for use in the Company's operating activities. Restricted cash and cash equivalents are primarily comprised of proceeds from the disposition of vehicles pledged under the terms of vehicle debt financing arrangements and are restricted for the purchase of revenue earning vehicles and other specified uses under the vehicle debt facilities, cash utilized as credit enhancement under those arrangements, proceeds from the Term C Loan which are utilized to collateralize letters of credit, and certain cash accounts supporting regulatory reserve requirements related to the Company's self-insurance. These funds are primarily held in demand deposit and money market accounts or in highly rated money market funds with investments primarily in government and corporate obligations.
Source: Item 23 — RECEIPTS (FDD pages 102–301)
What This Means (2025 FDD)
According to the 2025 Dollar Rent A Car Franchise Disclosure Document, restricted cash and cash equivalents are funds that the company cannot readily use for its operating activities. These primarily consist of several components related to vehicle financing and regulatory requirements.
Specifically, the restricted funds include proceeds from the sale of vehicles that are pledged under vehicle debt financing agreements. These proceeds are earmarked for purchasing new revenue-earning vehicles and for other uses as specified in the debt facilities. Additionally, cash used as credit enhancement under these financing arrangements is considered restricted.
Furthermore, proceeds from the Term C Loan, which are used to secure letters of credit, are also classified as restricted cash. Lastly, certain cash accounts that support regulatory reserve requirements related to Dollar Rent A Car's self-insurance programs are included in this category. These funds are typically held in demand deposit accounts, money market accounts, or highly rated money market funds invested in government and corporate obligations.