Avis Budget Group Inc. said on Tuesday that it will offer $250 million in convertible senior notes due in 2014.
The car rental company said the notes would be sold only to institutional buyers. The interest rate, conversion rate and other terms will be determined in negotiations between it and the initial purchasers.
Avis Budget said it expects to grant the purchasers the right to buy another $37.5 million worth of notes.
The company said it would simultaneously enter a warrant transaction and use a portion of the proceeds from the offering to buy a convertible note hedge. It said it would use the rest of the money for general corporate purposes, including repaying debt.
Avid Budget said the convertible note hedge and warrant transaction will increase the effective conversion price of the notes. Avis said the counterparties to the so-called call spread have told it they plan to hedge their exposure by entering derivative transactions that may affect the price of Avis Budget common shares.
Avis Budget shares fell $1.21, or 9.1 percent, to $12.07 in after-hours trading following the announcement about the offering. In the regular session, the stock gained 50 cents, or 3.9 percent, to $13.28 in a broad market rally.