Transaction Will Complete Applebee’s Refranchising and Transition
DineEquity to a Fully Franchised System
GLENDALE, Calif.--(BUSINESS WIRE)--Jul. 25, 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 TSFR Apple Venture LLC
for the sale of 65 Applebee's company-operated restaurants located in
Michigan. The agreement does not contain financing contingencies, but
closing is subject to regulatory processes related to liquor license
transfers and other closing conditions.
DineEquity has sold or entered into agreements for all of the 510
domestic Applebee’s company-operated restaurants that were acquired in
the acquisition of Applebee’s in 2007, with the exception of 23 test
market restaurants. Upon closure of the three pending refranchising
transactions, which are expected in the third or early fourth quarter of
2012, DineEquity will have completed its transition to a 99% franchised
restaurant system. This makes it unique in the full-service restaurant
industry.
“We are excited to reach this very important milestone in our history
and realize our strategic goal of transitioning the Applebee’s business
model away from Company-owned and operated restaurants and toward the
pure-play franchisor model we pioneered at IHOP,” said Julia A. Stewart,
Chairman and Chief Executive Officer of DineEquity, Inc. “I am very
proud of the team at Applebee’s and thank them for their tireless
efforts. We look forward to a mutually rewarding partnership with TSFR
Apple Venture and are committed to the ongoing success of our
franchisees.”
Mark Schostak, Executive Chairman of TSFR Apple Venture, said, “The
purchase of these restaurants emphasizes our long-term confidence in
Applebee’s and its leading position in the casual dining segment, the
Michigan economy and TEAM Schostak’s organizational abilities. We are
excited about the opportunity to participate in the revitalization
strategy to enhance performance and deliver an exceptional dining
experience to our guests.”
The transaction for 65 Applebee’s restaurants is expected to result in
net proceeds after taxes of approximately $61 million and reduce
DineEquity's sale-leaseback related financing obligations by
approximately $38 million. The Company expects to pay approximately $9
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 $2.6 million in annualized
general and administrative savings.
On May 1, 2012, DineEquity announced that it entered into an asset
purchase agreement with Potomac Family Dining Group, LLC for the sale of
39 Applebee's company-operated restaurants located in Virginia.
On May 29, 2012, DineEquity announced that it 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 Company anticipates closing these transactions in the third or early
fourth quarter of 2012. DineEquity will update its 2012 financial
performance guidance upon closing of these transactions.
To date, DineEquity has sold a total of 342 domestic Applebee's
company-operated restaurants since its acquisition of Applebee's
International in November 2007. The Company has demonstrated 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.
TSFR Apple Venture LLC is part of a family of Michigan-based restaurant
companies started in 1981 by the Schostak Family, which after the
transaction for 65 Applebee’s restaurants closes, will own, operate or
have an investment in more than 160 restaurants including fast food,
family dining and casual dining and employ more than 4,000 people
throughout Michigan. The business is led by Mark Schostak and
professional managers Bill Angott and Mike Devlin, all Michigan natives
and veterans in the restaurant industry. As part of its operating group,
TSFR Apple Venture LLC has an experienced and stable senior management
team.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its
subsidiaries, franchises and operates 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), 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.
Forward-Looking Statements
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.
Investor Contact
DineEquity,
Inc.
Ken Diptee
Executive Director, Investor Relations
818-637-3632
or
Media
Contact
Sard Verbinnen & Co.
Lucy Neugart and
Samantha Verdile
415-618-8750
