GLENDALE, Calif.--(BUSINESS WIRE)--May. 29, 2012--
DineEquity, Inc. (NYSE:DIN), the parent company of Applebee's
Neighborhood Grill & Bar and IHOP Restaurants, today announced that it
has entered into an asset purchase agreement with American Franchise
Capital, LLC for the sale of 33 Applebee's company-operated restaurants
located primarily in Missouri and Indiana. The agreement does not
contain financing contingencies, but closing is subject to regulatory
processes related to liquor license transfers and other customary
The transaction is expected to result in net proceeds after taxes of
approximately $26 million and reduce DineEquity's sale-leaseback related
financing obligations by approximately $22 million. The Company expects
to pay approximately $5 million related to the settlement of net working
capital liabilities and deal costs. Additionally, the sale of these
Applebee's company-operated restaurants will result in approximately
$1.3 million in annualized general and administrative savings. The
Company anticipates closing the transaction in the third quarter of 2012.
“We are pleased to announce the sale of 33 Applebee’s company-operated
restaurants, reflecting yet another significant step in our strategy to
transition to a 99% franchised restaurant system,” said Julia A.
Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.
“American Franchise Capital is a great franchise partner with deep
William J. Georgas, a Managing Partner with American Franchise Capital
and a previous Applebee’s franchisee with The Georgas Group, said, “We
are excited about this iconic brand’s future and look forward to
participating in the revitalization of Applebee's in a meaningful way.
This transaction represents the long-term continued confidence we have
in the brand and the establishment of a solid partnership.” Mr. Georgas
was previously the co-managing owner of The Georgas Group, a restaurant
franchise company which included 47 Applebee’s restaurants.
To date, DineEquity has sold a total of 342 Applebee's company-operated
restaurants since its acquisition of Applebee's International in
November 2007. DineEquity currently has two transactions, which it
anticipates will close in the third quarter of 2012. Upon consummation
of the pending sales of 33 additional Applebee's company-operated
restaurants, as detailed in this news release, and the 39 Applebee's
company-operated restaurants in Virginia detailed in DineEquity’s May 1st
news release, 97% of DineEquity's restaurants will be franchised. The
Company believes that its increasingly franchised business model is less
capital intensive and experiences less volatility in cash flow
performance compared to the operation of company-operated restaurants.
American Franchise Capital, LLC was formed by William Georgas and Trevor
Ganshaw for the purpose of acquiring high-end restaurant franchises in
the U.S. and Canada. Mr. Georgas is an industry veteran with over 20
years of operating experience in the restaurant franchise business. Mr.
Ganshaw has over 20 years of experience in the banking and investment
management industries. This is American Franchise Capital’s first
acquisition of Applebee's company-operated restaurants. American
Franchise Capital’s offices are located in Greenwich, Connecticut.
The Company will update its 2012 financial performance guidance upon
closing of this transaction.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its
subsidiaries, franchises and operates restaurants under the Applebee’s
Neighborhood Grill & Bar and IHOP brands. With more than 3,500
restaurants combined in 18 countries, over 400 franchisees and
approximately 200,000 team members (including franchisee- and
company-operated restaurant employees), we believe DineEquity is one of
the largest full-service restaurant companies in the world. For more
information on DineEquity, visit the Company's Web site located at www.dineequity.com.
Statements contained in this release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. You can identify these forward-looking statements by
words such as "may," "will," "should," "expect," "anticipate,"
"believe," "estimate," "intend," "plan" and other similar expressions.
These statements involve known and unknown risks, uncertainties and
other factors, which may cause actual results to be materially different
from those expressed or implied in such statements. These factors
include, but are not limited to: the effect of general economic
conditions; the Company's substantial indebtedness; risk of future
impairment charges; the Company's results in any given period differing
from guidance provided to the public; the highly competitive nature of
the restaurant business; the Company's business strategy failing to
achieve anticipated results; risks associated with the restaurant
industry; shortages or interruptions in the supply or delivery of food;
changing health or dietary preferences; our dependence upon our
franchisees; our engagement in business in foreign markets; harm to our
brands' reputation; litigation; environmental liability; liability
relating to employees; failure to comply with applicable laws and
regulations; failure to effectively implement restaurant development
plans; concentration of Applebee's franchised restaurants in a limited
number of franchisees; credit risk from IHOP franchisees operating under
our previous business model; termination or non-renewal of franchise
agreements; franchisees breaching their franchise agreements; insolvency
proceedings involving franchisees; changes in the number and quality of
franchisees; inability of franchisees to fund capital expenditures;
third-party claims with respect to intellectual property assets; heavy
dependence on information technology; failure to protect the integrity
and security of individually identifiable information; failure to
execute on a business continuity plan; inability to attract and retain
talented employees; risks associated with retail brand initiatives;
failure of our internal controls; and other factors discussed from time
to time in the Company's Annual and Quarterly Reports on Forms 10-K and
10-Q and in the Company's other filings with the Securities and Exchange
Commission. The forward-looking statements contained in this release are
made as of the date hereof and the Company assumes no obligation to
update or supplement any forward-looking statements.
Source: DineEquity, Inc.
Executive Director, Investor Relations
Sard Verbinnen & Co.