Risk Factors

Risks Related to Macroeconomic Factors

All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing. Unidas’ business, financial condition, results of operations and prospects may be materially adversely affected by any of the risks and, consequently, the securities issued by the Company may be negatively impacted. The briefly described risks are those which Unidas currently believes that most likely may materially affect its performance. Additional risks which are unrelated or unknown by Unidas may affect its businesses.

1) Risks Related to Macroeconomic Factors

  • Amendments to the tax law may increase certain direct and indirect taxes, which could reduce the Company‘s gross margin;
  • Effects of exchange rate fluctuation;
  • Variation in interest rates may result in a negative effect over the operating results and activities of the Unidas;
  • The Euro Zone sovereign-debt crisis may threaten economies such as Italy, Spain, Greece, Ireland and Portugal, home of Unidas‘ major shareholder;
  • Brazil hosts a large number of limited installed capacity automakers;
  • A decrease in Brazil‘s level of economic activity may reduce the demand for car rental;
  • Results may be affected by the flow of passengers traveling by airplane.

Risks Relating to the Unidas and to the Industry

2) Risks Relating to the Unidas and to the Industry

  • The Unidas faces the risk of non-renewal of fleet rental and fleet management agreements with major costumers;
  • The UnidasĀ“ results may be adversely affected by an increase in the purchase price of new cars;
  • A decrease in the demand for used cars may adversely affect the UnidasĀ“ business;
  • The corporate fleet rental, corporate fleet management and car rental industries are highly competitive;
  • A reduction in the pace of economic expansion in Brazil may reduce the demand for car rentals;
  • The Unidas faces the risk of non-renewal of airport concessions;
  • Unidas is subject to risks related to legal and administrative proceedings, which may adversely affect its results;
  • The resignation of Unida‘s main executive officers, or the Company‘s incapacity to attract and maintain the members of its Board of Executive Officers, may adversely affect its financial condition and operating revenues or losses;
  • AUnidas‘ business require intensive capital to fund the renewal of its fleet and to implement its growth strategy;
  • Unidas‘ results may be affected by pricing errors due to incorrect calculation of estimated depreciation of its fleet compared to the effective future depreciation;
  • Unidas does not have insurance against specific risks;
  • TUnidas is subject to the compliance with specific obligations provided for financial agreements, as well as with regard to the capacity of incurring additional debts;
  • Unidas is subject to the risk of cancellation or non-renewal of specific property lease agreements;
  • Unidas‘ capital is held by a group of shareholders that may have conflict of interests;
  • Shareholders may not receive dividends or interest on shareholders‘ equity for the income recognized in the year.

Risks Related to the Company’s debenture offering

3) Risks Related to the Company’s debenture offering

  • The risk perception in other countries, especially the emerging economy countries, may affect the market and the liquidity of Brazilian securities, including debentures;
  • Unidas is subject to the compliance with specific obligations provided for financial agreements, as well as with regard to its capacity of incurring additional debts;
  • Obligations arising from the debentures are subject to early maturity assumptions;
  • The assignment does not guarantee the integrity of the obligations arising from the debentures. In case of early maturity of the obligations arising from the indenture, the object of the assignment foreclosure will not be sufficient to settle all the obligations arising from the debentures;
  • In case of early maturity of the obligations arising from the debentures, there are no guarantees that the assignment or fiduciary sale foreclosure will succeed;
  • The lack of collateral assignment of receivables could result in challenges regarding the validity and/or feasibility of the assignment;
  • The debentures may be subject to early redemption in case of unavailable interbank rate (DI) and/or Extended Consumer Price Index (IPCA) or in specific cases, as provided for Indenture‘s Clause 5.2.1;
  • Possible downgrade in the debentures risk rating may reduce trading liquidity in the secondary market;
  • The low liquidity displayed by the Brazilian secondary market in relation to debenture trade might make the sale of debentures more difficult.
  • Possible non-validation of the interbank rate as disclosed by CETIP, if a collection of debentures decided by court is needed;
  • The issuance with additional security interest, which is presented through the assignment of receivables from fleet lease agreements, which are subject to the risk of non-renewal by the major clients.