NEW YORK (AP) - Avis Budget Group Inc.'s stock continued its decline Tuesday as investors worried that the rental car company will fail to meet its debt obligations.Avis shares dropped 23 cents, or 27.1 percent, to close at 62 cents. They touched an all-time low of 55 cents earlier in the session.
Avis shares have declined steadily since the company warned on Nov. 7 that it may breach its debt covenants, which would allow its lenders to demand their money back sooner.
Parsippany, N.J.-based Avis blamed its debt troubles to a drop in rental car demand and increased borrowing costs related to fleet financing. Avis is in talks with its lenders to relax some of its requirements.
In a note to investors late Monday, Goldman Sachs analyst Christopher Agnew estimated that the stock is pricing in a 40 percent probability of default over the next year. Agnew said he believes that percentage is too high and that Avis should be able to negotiate changes to its loan covenants.
Agnew maintained a "Buy" rating on the company, but lowered his six-month target price on the stock to $1.50 from $2.
When companies breach their debt covenants, it is usually by falling below a set financial threshold.
CAR closed today @ $0.49.
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