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Budget Group Inc., the former parent of RV rental firm Cruise America, apparently will be acquired by travel services firm Cendant Corp.
Cendant, which has car rental firm Avis among its assets, says it will operate Budget’s rental car business as a separate and independent brand.
Cendant agreed to pay $107.5 million in cash for Budget’s operations in the U.S., Canada, Australia, New Zealand and Latin America. Cendant also will assume $2.7 billion-worth of debt backed by Budget’s rental fleet.
Budget filed for Chapter 11 bankruptcy protection last month and Budget believes the holders of its common stock, convertible subordinated notes and trust preferred securities will not receive any distribution or recovery.
Cendant’s proposed acquisition of Budget needs bankruptcy court approval in the U.S. and regulatory approval outside the U.S. The deal has received an OK from U.S. anti-trust authorities.
The combination of the Avis and Budget would make Cendant the No. 2 car rental firm behind Enterprise Rent-A-Car Co.
Budget acquired Cruise America from Randall and Robert Smalley Jr. early in 1998 and the Smalleys re-acquired Cruise America from Budget during July 2000. Thor Industries Inc. provided financing to help the Smalleys re-acquire the RV rental firm.
At the time of the re-purchase, Budget continued owning 19.9% of Cruise America but the Smalleys bougth Budget’s stake in Cruise America 18 months ago.