DineEquity Inc. (DIN) has agreed to sell 63 company-operated Applebee's restaurants in Minnesota and Wisconsin to its largest franchisee, Apple American Group LLC, for $32 million, planning to use the proceeds to reduce debt.
The sale is the latest effort by DineEquity to sell restaurants to cut debt as it moves toward a more franchised business model. It has sold 110 Applebee's company-operated restaurants in five states since its predecessor, IHOP Corp., bought the company for $1.9 billion in 2007. The company has seen results improve of late but is facing same-store sales declines at both Applebee's and IHOP restaurants.
The sale will enable DineEquity to reduce securitized debt by $28 million and produce $2 million of annualized general and administration savings. The removal of leases associated with the restaurants will cut its debt by $77 million on an adjusted for covenant calculation basis. DineEquity plans to detail the deal's impact on 2010 guidance when it reports second-quarter results Thursday.
To read the rest of the story, please go to: The Wall Street Journal.
