$EACR
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Avis Fleet Services Provides Earn-A-Car With Increased Credit Line For New Vehicle Purchases
JOHANNESBURG, South Africa, May 10, 2012 /PRNewswire via COMTEX/ -- Earn-A-Car Inc. (OTC:BB - ticker symbol EACR), ("Company"), announced today that Avis Fleet Services in South Africa has increased the Company's wholly owned South African subsidiary's current credit line from the previous ZAR9million, to ZAR13million (approximately US$1,654,000). Currently, the Company's wholly owned subsidiary, Earn-A-Car (PTY) Ltd., has utilized 45% of the total available amount, with approximately ZAR7.1million (approximately US$900,000) available for additional vehicle purchases. In addition, the Company, through its wholly owned South African subsidiary, is currently negotiating additional credit lines with other lending institutions, in line with its policy of rapid fleet expansion to meet customer demand.
John Storey, CEO and President of the Company, noted: "This increase of our existing credit facility with Avis Fleet Services will allow our Company to pursue our short term goal of expanding our fleet to meet the growing customer demand. In addition to the larger Avis facility, which we believe reflects the confidence that our lenders have in our business model, we are actively negotiating with other lending institutions for more loan capital so that we can expand our fleet size substantially over the course of this year. As a result of an increase in our fleet size, we anticipate a positive impact on our revenue growth and profit and expect our internal ROI to remain constant at around 50% pre-tax. While the Company's management is always aware of the potential to over-leverage, our business model lends itself naturally to financial leverage by virtue of our operating margins. In any event, the Board has decided to constrain senior debt to a prudent 60% of total assets and maintain senior debt interest cover at no less than 40% of EBIT. Management is confident that the Company can access even more significant bank financing on an ongoing basis, in order to fuel the growth of our Company which is entirely driven by customer demand. It is our intention to continue to rapidly and substantially increase the size of our fleet and our revenue stream, to satisfy this ongoing and robust demand for our cars by individuals who are unable to meet South Africa's stringent credit requirements. We remain positive that going forward, we can both meet and significantly improve the quantum of profit the Company already generates."
About Earn-A-Car Inc.
Earn-A-Car Inc., ("Company") is the parent company of Earn-A-Car (PTY) Ltd., a South African entity wholly-owned by the Company, which provides mid to low-range automobiles to individuals in South Africa with poor credit on a "rent-to-own" basis. The Company's business model is structured to take advantage of the gap that exists in the southern African market, where cars for personal and business use are in high demand as a result of a lack of public transport infrastructure, but where traditional bank financing is not an available option for people with low credit ratings. The Company's vehicles are all fitted with the latest in anti-theft technology, as well as tracking and disabling devices which allow for its vehicles to be retrieved immediately in the event of theft, or non-payment by the customer. In the Company's recent 8K SEC Filings, Earn-A-Car reported it had generated net post-tax income ofUS$400,000 for their fiscal year ending February 2011, an improvement of 50% year-on-year, on gross sales of US$2,138,000.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks, uncertainties and assumptions that, if they never materialize or if they prove incorrect, could cause the Company's results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenue, or other financial items, any statements of the plans, strategies, and objectives of management for future operations, any statements concerning proposed new products, services or developments, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing. These statements are based on expectations as of the date of this press release. Actual results may differ materially from those projected because of a number of risks and uncertainties, including those detailed from time to time in the Company's reports filed with the Securities and Exchange Commission. The Company assumes no obligations and does not intend to update these forward-looking statements.
Earn-A-Car Inc. is a US public company (OTC:BB - ticker symbol EACR). For more information about Earn-A-Car (PTY) Ltd., please contact: Mr. John Storey / Mr. Bruce Dunnington Tel: +27(0)11-880-0973 Fax: +27(0)86-550-5919 md@earnacar.co.za website: http://www.earnacar.co.za
SOURCE EARN-A-CAR INC.
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