Budget NZ unaffected by US Chapter 11 bankruptcy filing - MD

By NZPA

Tuesday 30th July 2002

Budget Rent a Car's New Zealand division is in fine fettle, despite its United States parent Budget Group Inc filing for bankruptcy protection on Monday, managing director Rob MacGregor said today.

"There is no effect on the business locally at all -- it's pretty much business as normal down here," he told NZPA.

Illinois-based Budget Group, which has been hurt by the recession in business travel since September 11, yesterday succumbed to its heavy debt burden and filed for Chapter 11 bankruptcy protection.

The company, which was expected to file for bankruptcy, said it has secured $US750 million ($NZ1.63 billion) of loans to pay for new cars, along with $US100 million of additional funding to keep its operations running as it reorganises.

Under US bankruptcy law, the firm has 190 days to trade its way out of trouble.

Mr MacGregor said that law had no effect outside of the US, and applied only to Budget Group and some of its domestic subsidiaries.

The car rental company's New Zealand operations were run by subsidiary Budget International, which was not included in the Chapter 11 filing, he said.

Budget New Zealand, the number two car rental company in the country, had experienced strong growth in its business since September 11, as overseas tourists flocked to "safe-haven" destinations, Mr MacGregor said.

"Our business results, both in revenue and profitability have climbed. We are in a very strong position. In fact, in February of this year we recorded the highest revenue month in the history of the business."

Mr MacGregor said two major US institutions had agreed to back Budget Group, which was "a great vote of confidence in their ability to trade through the Chapter 11 process".

Its largest creditor is Wells Fargo Bank, as trustee for about $US430 million of debt.

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