SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10308
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July 9, 1999 (June 30, 1999)
(Date of Report (date of earliest event reported))
Cendant Corporation
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction 06-0918165
of incorporation or (I.R.S. Employer
organization) Identification Number)
9 West 57th Street
New York, New York 10019
(Address of principal executive (Zip Code)
office)
(212) 413-1800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if applicable)
Item 2. Disposition of Assets
References to "Cendant", "Company" and "we" means Cendant
Corporation and its subsidiaries.
On June 30, 1999, we announced the completion of the disposition
of our Fleet Management Segment, which includes PHH Vehicle
Management Services Corporation, Cendant Business Answers (Europe)
Plc, The Harpur Group, Ltd. and Wright Express Corporation,
pursuant to an agreement between PHH Corporation ("PHH"), a
wholly-owned subsidiary of the Company, and Avis Rent A Car, Inc.
("ARAC"). Pursuant to the agreement, ARAC acquired our Fleet
Management Segment through the repayment in cash of $1.44 billion
of assumed intercompany debt and the issuance of $360 million of
convertible preferred stock of Avis Fleet Leasing and Management
Corporation ("Avis Fleet"), a wholly-owned subsidiary of ARAC to
PHH Corporation, a wholly-owned subsidiary. The convertible
preferred stock of Avis Fleet is convertible into common stock
of ARAC at our option upon the satisfaction of certain conditions,
including the per share price of ARAC Class A common stock
equaling or exceeding $50 per share and the Fleet Management
Segment attaining certain EBITDA (earnings before interest, taxes,
depreciation and amortization) thresholds, as defined. There are
additional circumstances upon which the shares of Avis Fleet
convertible preferred stock are automatically or mandatorily
convertible into ARAC common stock. The transaction follows a
competitive bidding process undertaken by Chase Securities Inc.,
our financial advisor.
We beneficially own approximately 19% of the currently outstanding
Class A common stock of ARAC and have four designees on the ARAC
Board of Directors. If all of the Avis Fleet convertible preferred
stock was converted into common stock of ARAC, then we would own
approximately 34% of ARAC's outstanding common equity (although
our voting interest would be limited, in most instances, to 20%).
We also license the Avis trademark to ARAC pursuant to a 50-year
master license agreement and receive royalty fees based upon 4% of
ARAC revenue, escalating to 4.5% of ARAC revenue over a 5-year
period. In addition, we operate the telecommunications and
computer processing system which services ARAC for reservations,
rental agreement processing, accounting and fleet control for
which we charge ARAC at cost. We also entered into certain
licensing and services agreements with ARAC and Avis Fleet in
connection with the aforementioned Fleet Management Segment
disposition.
We account for our investment in ARAC utilizing the equity method
and expect to record an after-tax gain of approximately $700
million from the transaction in the second quarter of 1999.
Completion of the transaction was a condition to the previously
announced "Dutch Auction" tender offer by Cendant Stock
Corporation, a wholly-owned subsidiary of the Company, to purchase
50 million shares of our common stock from existing shareholders
at prices of not greater than $22.50 per share nor less than
$19.75 per share.
Reference is made to our Form 8-K filed with the Securities and
Exchange Commission on June 22, 1999, which includes our unaudited
pro forma consolidated financial statements (i) for the year ended
December 31, 1998 and (ii) as of and for the three months ended
March 31, 1999, giving effect to the disposition of our Fleet
Management Segment and the purchase of 50 million shares of our
common stock pursuant to the aforementioned "Dutch Auction" tender
offer.
Reference is also made to Exhibit 99.1 herein, which is
incorporated by reference in its entirety.
Item 5. OTHER EVENTS
On June 30, 1999, we announced that at our July Board of
Directors' meeting we intend to reduce the size of our Board of
Directors from 17 to 14 members following the resignations of
three Directors. Robert P. Rittereiser, Craig R. Stapleton and E.
John Rosenwald, Jr., all of whom previously served on the Board's
Litigation Committee, have resigned following a vote by
shareholders on May 27, 1999 to eliminate the Committee. Reference
is made to Exhibit 99.2 herein, which is incorporated by reference
in its entirety.
Item 7. EXHIBITS
Exhibit
No. Description
- -------- -----------------------------------------------------------------------
99.1 Press Release: Cendant Corporation Completes Divestiture of Fleet
Segment; Avis Rent A Car, Inc. Acquires the Company's Fleet Segment
for $1.8 Billion
99.2 Press Release: Cendant Corporation Announces Board Changes; Company
Will Reduce Size of its Board from 17 to 14 Directors
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the
undersigned hereunto duly authorized.
CENDANT CORPORATION
BY: /s/ David M. Johnson
David M. Johnson
Senior Executive Vice President and
Chief Financial Officer
Date: July 9, 1999
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
REPORT DATED JULY 9, 1999 (JUNE 30, 1999)
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------ ----------------------------------------------------------------------
99.1 Press Release: Cendant Corporation Completes Divestiture of Fleet
Segment; Avis Rent A Car, Inc. Acquires the Company's Fleet Segment
for $1.8 Billion
99.2 Press Release: Cendant Corporation Announces Board Changes; Company
Will Reduce Size of its Board from 17 to 14 Directors
Exhibit 99.1
FOR IMMEDIATE RELEASE
CENDANT CORPORATION COMPLETES DIVESTITURE OF FLEET SEGMENT
Avis Rent A Car, Inc. Acquires the Company's Fleet Segment for $1.8 Billion
Generates Gain of Approximately $700 Million for Cendant
Previously Announced "Dutch Auction"
Self-Tender Offer Scheduled to Expire on July 15, 1999
New York, NY, June 30, 1999 -- Cendant Corporation (NYSE: CD) today
announced that it has completed the divestiture of its fleet segment. Avis Rent
A Car, Inc. (NYSE: AVI) has acquired the Company's fleet segment, which includes
PHH Vehicle Management Services Corporation, Cendant Business Answers (Europe)
PLC; The Harpur Group Ltd.; and Wright Express Corporation, for $1.44 billion in
cash and $360 million in Convertible Preferred Stock.
The Company has recorded an after-tax gain of approximately $700
million from the transaction. Completion of the Fleet/Avis transaction was a
condition to the previously announced "Dutch Auction" self-tender offer to
repurchase up to 50 million shares of Cendant stock. The self-tender offer
commenced on June 16, 1999 and will expire at 12:00 midnight, New York City
time, on July 15, 1999, unless the offer is extended.
In addition, Robert D. Kunisch has retired as a vice chairman of the
Company following today's completion of the divestiture of Cendant's fleet
segment, but will remain as a director.
Cendant's Chairman, President and CEO Henry R. Silverman stated: "Bob
Kunisch played a critical role by ensuring the flawless integration of the PHH
business units into Cendant. His diligent efforts and steadfast commitment
resulted in a seamless transition of client relationships and continued profit
growth following the acquisition of PHH by HFS in 1997."
Cendant Corporation is a global provider of consumer and business
services. The Company's core competencies include building franchise systems,
providing outsourcing solutions and direct marketing. As a franchisor, Cendant
is the world's leading franchisor of hotels, rental car agencies, tax
preparation services and real estate brokerage offices. The real estate segment
also includes Welcome Wagon/GETKO and the Company's soon-to-be created
residential real estate services portal on the Internet. As a provider of
outsourcing solutions, Cendant is the world's largest vacation exchange service;
a major provider of mortgage services to consumers and the global leader in
employee relocation. In direct marketing, Cendant provides access to insurance,
travel, shopping, auto, and other services, primarily to customers of its
affinity partners. Other business units include NCP, the UK's largest private
car park operator, and Wizcom. Headquartered in New York, NY, the Company has
more than 30,000 employees and operates in over 100 countries. More information
about Cendant, its companies and brands may be obtained by visiting our Web site
at www.cendant.com or by calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Contacts:
Elliot Bloom Denise Gillen
212-413-1832 212-413-1833
Sam Levenson
212-413-1834
Exhibit 99.2
FOR IMMEDIATE RELEASE
CENDANT CORPORATION ANNOUNCES BOARD CHANGES
Company Will Reduce Size of its Board from 17 to 14 Directors
Robert P. Rittereiser, Craig R. Stapleton and E. John Rosenwald Resign
From Board
New York, NY, June 30, 1999 -- Cendant Corporation (NYSE: CD)
today announced that at its July Board of Directors' meeting it intends to
reduce the size of the Company's Board from 17 to 14 members following the
resignations of three directors. Robert P. Rittereiser, Craig R. Stapleton and
E. John Rosenwald, Jr., all of whom previously served on the Board's Litigation
Committee, have resigned following a vote by shareholders on May 27, 1999 to
eliminate that committee.
"On behalf of Cendant shareholders, I want to thank Messrs.
Rosenwald, Rittereiser and Stapleton for their service to our company and its
shareholders. They have been part of an active Board that has helped restore
value after the crisis last year when we discovered accounting irregularities at
the former CUC International. They have assisted management to restructure our
company and refocus our strategy," Mr. Silverman said.
The Company also announced that it has begun to implement
recommendations of the Blue Ribbon Committee on Improving the Effectiveness of
Audit Committees.
"These changes are consistent with the commitment we made to
our shareholders to reduce the size of our Board and to optimize the performance
of Board committees," Mr. Silverman concluded.
Cendant Corporation is a global provider of consumer and business
services. The Company's core competencies include building franchise systems,
providing outsourcing solutions and direct marketing. As a franchisor, Cendant
is the world's leading franchisor of hotels, rental car agencies, tax
preparation services and real estate brokerage offices. The real estate segment
also includes Welcome Wagon/GETKO and the Company's soon-to-be created
residential real estate services portal on the Internet. As a provider of
outsourcing solutions, Cendant is the world's largest vacation exchange service;
a major provider of mortgage services to consumers and the global leader in
employee relocation. In direct marketing, Cendant provides access to insurance,
travel, shopping, auto, and other services, primarily to customers of its
affinity partners. Other business units include NCP, the UK's largest private
car park operator, and Wizcom. Headquartered in New York, NY, the Company has
more than 30,000 employees and operates in over 100 countries. More information
about Cendant, its companies and brands may be obtained by visiting our Web site
at www.cendant.com or by calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Contacts:
Elliot Bloom Denise Gillen
212-413-1833 212-413-1833
Sam Levenson
212-413-1834