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. 1-7797
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July 9, 1999 (June 30, 1999) (Date of Report (date of
earliest event reported))
PHH Corporation
(Exact name of Registrant as specified in its charter)
Maryland 52-0551284
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
6 Sylvan Way
Parsippany, New Jersey 07054
(Address of principal executive (Zip Code)
office)
(973) 428-9700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if applicable)
<PAGE>
Item 2. Disposition of Assets
References to "PHH", "Company" and "we" means PHH Corporation and its
subsidiaries.
On June 30, 1999, pursuant to Cendant Corporation's (the "Parent Company")
program to divest non-strategic businesses and assets, we completed 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 Avis Rent A Car, Inc. ("ARAC") and us. 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. 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 have one designee currently on the ARAC Board of Directors. The Parent
Company beneficially owns approximately 19% of the currently outstanding Class A
common stock of ARAC. If all of the Avis Fleet convertible preferred stock was
converted into common stock of ARAC, the Parent Company would own approximately
34% of ARAC's outstanding common equity (and, therefore, we would own
approximately 15% of ARAC's outstanding common equity), although the Parent
Company's voting interest would be limited, in most instances, to 20%. The
Parent Company also licenses the Avis trademark to ARAC pursuant to a 50-year
master license agreement and receives royalty fees based upon 4% of ARAC
revenue, escalating to 4.5% of ARAC revenue over a 5-year period. In addition,
the Parent Company operates the telecommunications and computer processing
system which services ARAC for reservations, rental agreement processing,
accounting and fleet control for which the Parent Company charges ARAC at cost.
We and the Parent Company entered into certain licensing and services agreements
with ARAC and Avis Fleet in connection with our aforementioned Fleet Management
Segment disposition.
As a result of the disposition we will classify our Fleet Management Segment as
a discontinued operation in current and prior periods when we report financial
information. In connection with the disposition of our Fleet Management Segment,
we expect to record an after-tax gain on sale of discontinued operations of
approximately $850 million in the second quarter of 1999.
<PAGE>
Item 7. EXHIBITS
Exhibit No. Description
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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
<PAGE>
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.
PHH CORPORATION
BY: /s/ David M. Johnson
David M. Johnson
Senior Executive Vice President
and Chief Financial Officer
Date: July 9, 1999
<PAGE>
PHH CORPORATION
CURRENT REPORT ON FORM 8-K
REPORT DATED JULY 9, 1999 (JUNE 30, 1999)
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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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
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
