ANC to Sell Alamo, National Car Rental

NEW YORK June 17, 2003; Jeffrey Goldfarb writing for Reuters reported that ANC Rental, which has been operating under bankruptcy protection since November 2001, said on Tuesday it would sell its Alamo Rent a Car and National Car Rental chains to buyout firm Cerberus Capital Management for $230 million cash.

New York-based Cerberus also would take on $2 billion of ANC's debt that is secured by rental cars, another $60 million of non-vehicle-related debt, and provide $150 million of working capital, ANC said.

The rental car industry has suffered badly since the Sept. 11 attacks, and the weakened economy that ensued, keeping many would-be travelers at home instead.

"The reality is that ANC has been limping along for two or three years," said Neil Abrams, who advises the industry.

"To compete, you need to put money in to develop new markets, new technologies, new strategic alliances, new distribution channels, to optimize fleet programs and financing, and I'm sure Cerberus will do that," he said.

ANC has slashed costs by consolidating the brands at some locations and cutting back the number of cars in its fleet.

ANC's deal with Cerberus, which was first reported in Tuesday's Wall Street Journal, needs approval from the Delaware bankruptcy court after an auction process that could lure other bidders. ANC has been seeking a buyer for almost two years.

Some unsecured creditors are opposed to the deal, but ANC is negotiating to hash out the disagreements before a bankruptcy court hearing scheduled for Wednesday, ANC Chief Executive and President Bill Plamondon said in an interview.

ANC's board considered eight "qualified" bids for the two chains under a formal sale process started by investment bank Lazard in mid-January, he added.

"Lazard will go back after tomorrow's hearing is done and contact each and every one of the participants and see if there's any update they need," Plamondon said.

Cerberus Capital did not return a call seeking comment. The firm was advised by Bill Lobeck, who once was part of a group that owned National Car Rental.

ANC, based in Fort Lauderdale, Florida, is asking that the U.S. Bankruptcy Court for the District of Delaware approve the sale by Aug. 6.

The two chains have more than 3,200 locations in 83 countries and, combined, rank fourth in the United States, behind Enterprise Rent-a-Car Co., Cendant Corp.'s combined Avis and Budget chains, and Hertz, a unit of Ford Motor Co.

Cendant considered buying ANC two years ago before pursuing Budget instead.

ANC, which was spun off from car retailer AutoNation Inc. in 2000, caters to both business and leisure travelers, with National targeted to the former and Alamo to the latter. General Motors supplies the bulk of ANC's 200,000 vehicles.

All that would remain of ANC after the sale of Alamo and National would be some payables and receivables related to a defunct insurance replacement business, Plamondon said.