ERAC Canada Finance Ltd.

Kent Wideman, CFA, Jarmo Saari, CFA / 416-593-5577 ext.2235, ext. 2257 / e-mail: kwideman@dbrs.com

DBRS is assigning initial ratings of A (low) and R-1 (low) to the senior notes and commercial paper of ERAC Canada Finance Limited respectively, based on the unconditional guarantee provided by the parent, Enterprise Rent-A-Car Company ("Enterprise" or "the Company"). These ratings are supported by Enterprise’s industry leadership, respectable risk profile and a track record of favourable and stable earnings.

More specifically, key considerations in these ratings are as follows: (1) Enterprise has a leadership position and experience in its core local rent-a-car operation in the U.S., a business that has a more stable profile than the "on-airport" operations that other major car rental companies focus on. The Company has established relationships with insurance companies, auto body shops and auto dealers, and has consistently maintained a utilization rate in the 88%-90% range. Past earnings and profitability levels have been maintained at favourable levels through the 1990s, with a relatively high degree of stability, even in years where used car prices were under pressure. (2) While the private ownership of Enterprise restricts the flexibility of issuing common equity, this structure has historically served the Company well, allowing management to have a longer term focus on key staffing and service strategies that have been integral to Enterprise’s success. (3) The Company has a respectable financial risk profile. Despite the capital intensive nature of the rent-a-car business, cash flow management and coverage ratios are satisfactory, liquidity is maintained at an acceptable level and the outlook for leverage (which has been improving in recent years) remains favourable. (4) Challenges include the fact that Enterprise has little diversification outside the core U.S. local rent-a-car market (either by product or geography), where several major traditional "on-airport" rent-a-car companies have entered as direct competitors in recent years. Despite the Company’s past success, the rent-a-car business has never been an easy market, and Enterprise is not immune from factors that could result in a lower level of driving over a prolonged period. Although successfully managed in the past, Enterprise also maintains the residual risk on virtually all the vehicles it rents.

Dominion Bond Rating Service Limited (DBRS) will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in purchasing this report, please contact us at: info@dbrs.com