Press Release: Cendant Corporation
February 5, 2001
NEW YORK, NY -- Cendant Corporation (NYSE: CD) announced Friday the basis for resetting the interest rate for its
Trust Preferred Securities (``TOPrS'') underlying its Income PRIDES securities effective as of February 16, 2001
in connection with the remarketing of the TOPrS. The Company also announced its intention to exercise its right
to cap the reset spread used to determine the reset interest rate at 200 basis points and to retain the TOPrS in
full satisfaction of the Income PRIDES holders' obligation to purchase Cendant common stock on February 16, 2001
if the remarketing of the TOPrS fails.
The securities affected by this announcement are as follows:
-- 6.45% Trust Originated Preferred Securities of Cendant Capital II
(CUSIP No. 151313 20 2)
-- 6.45% Debentures Due February 16, 2003 underlying the Income PRIDES of
Cendant
-- Income PRIDES of Cendant (CUSIP No. 151313 30 1)
-- New Income PRIDES of Cendant (CUSIP No. 151313 50 9)
The reset interest rate for the TOPrS and the related debentures, effective February 16, 2001, will be equal
to the sum of the reset spread (2%) and the rate of interest on the selected two-year benchmark Treasury Security
(CUSIP No. 9128276S6; Maturity 1/31/03) in effect on February 13, 2001, as selected by Merrill, Lynch, Pierce,
Fenner & Smith Incorporated as Reset Agent. Based on the rate of interest on the identified two-year benchmark
Treasury Security in effect on February 2, 2001 (which was 4.62%), the reset interest rate for the TOPrS and the
related debentures having a reset spread of 2% would have been 6.62% if calculated on February 2, 2001. We estimate
that the market interest rate for securities comparable to the TOPrS would have been approximately 9.52% to 11.02%
on February 2, 2001.
Based on market conditions, Cendant's credit rating and Cendant's exercise of its right to cap the reset spread
at 2%, we believe there is very little possibility of the TOPrS (earning the below-market capped reset interest
rate) being remarketed successfully on February 13, 2001. Unless market conditions change dramatically, the TOPrS
will not be remarketed, and there will be a ``failed remarketing.''
In the event of a failed remarketing, Cendant intends to exercise its right to retain TOPrS held as part of Income
PRIDES in full satisfaction of the Income PRIDES holders' obligations to purchase Cendant common stock on February
16, 2001, the Settlement Date, under the related purchase contracts. In that case, holders of Income PRIDES that
do nothing will receive the Cendant common stock due to them upon settlement of their purchase contracts. However,
a holder of Income PRIDES could elect to meet the purchase contract obligation by paying cash ($50 per Income PRIDES)
for the Cendant common stock, and retaining the TOPrS earning the below-market capped reset interest rate. Due
to market conditions, it is expected that the TOPrS bearing the reset interest rate will have a market value of
less than their $50 face amount.
Holders of TOPrS that are held separately from Income PRIDES will be entitled to submit them to the trustee, Wilmington
Trust Company, at any time from February 20, 2001 until February 27, 2001, and receive $50 per TOPrS, plus any
accrued and unpaid distributions, on March 2, 2001. If a holder continues to hold TOPrS, the holder will receive
distributions at the below-market capped reset interest rate until they are redeemed or repaid.
For additional information, contact Merrill, Lynch, Pierce, Fenner & Smith Inc., as Information Agent, at 212-236-3790
between the hours of 9:00 a.m. - 5:00 p.m. (EST), Monday through Friday.
Cendant Corporation is a diversified global provider of business and consumer services primarily within the real
estate and travel sectors. The Company's core competencies include building franchise systems and providing outsourcing
services. Cendant is among the world's leading franchisers of real estate brokerage offices, hotels, rental car
agencies, and tax preparation services. Cendant is also a provider of outsourcing solutions to its business partners
including mortgage origination, employee relocation, customer loyalty programs, and vacation exchange services.
Other business units include NCP, the UK's largest private car park operator, and WizCom, an information technology
services provider. With headquarters in New York City, the Company has approximately 28,000 employees and operates
in over 100 countries. More information about Cendant, its companies, brands and current SEC filings may be obtained
by calling 877-4INFO-CD (877-446-3623) or by visiting the Company's Web site at http://www.cendant.com.
SOURCE: Cendant Corporation