Shares of Avis Budget Group (NASDAQ:CAR) dropped about 10% on Monday after the company disclosed that it had entered into an Equity Distribution Agreement with a group of major investment banks.
Under the agreement, dated March 27, 2026, Avis Budget has the option to sell up to 5,000,000 shares of its common stock through a network of 10 sales agents, including BofA Securities, J.P. Morgan Securities, Morgan Stanley and Wells Fargo Securities. The shares may be offered through at-the-market transactions on the Nasdaq Global Select Market or through other permitted sales methods.
The company will pay the participating sales agents a commission of up to 2.00% of the gross selling price for shares sold on its behalf. In addition, Avis Budget may also choose to sell shares directly to one or more of the sales agents acting as principal, with pricing determined through separate negotiated agreements.
Avis Budget emphasized that it is not required to sell any shares under the arrangement and retains the right to pause or suspend the program at any time. Any proceeds generated from potential share sales are expected to be used for general corporate purposes.
The agreement also contains customary representations, warranties and indemnification clauses governing the relationship between Avis Budget and the participating financial institutions.