UPDATE 1-Advantage to file for bankruptcy as Hertz cuts car supply

Tue Nov 5, 2013 2:19pm EST
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* Files for bankruptcy after Hertz cancels lease agreements

* Advantage owners question book value of leased fleet

* Hertz shares fall as much as 17 pct (Adds statement from Hertz, details, share price)

Nov 5 (Reuters) - Advantage Rent A Car, which Hertz Global Holdings Inc hived off as part of a deal to buy Dollar Thrifty, will file for bankruptcy after Hertz terminated lease agreements that provided Advantage with its cars.

Shares of Hertz fell as much as 17 percent after Advantage's owners said the book value of the cars passed to them at the time of the sale last year was too high.

Hertz terminated lease agreements on 24,000 Advantage vehicles on Saturday, saying Advantage's owners had failed to make some payments.

Hertz sold Advantage to Franchise Services of North America (FSNA) last year to satisfy antitrust authorities, as the brand competes with Dollar Thrifty in low-cost car rentals.

Simply Wheelz LLC, a unit of FSNA that does business as Advantage Rent A Car, leased its vehicles from Hertz as part of the deal.

FSNA said Simply Wheelz recorded a loss of about $8.6 million on the vehicles it sold from the fleet since June, a "significant difference" from the book value stated by Hertz.   Continued...