IHOP 2008 Annual Report Download - page 118

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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
10. Debt (Continued)
unaffiliated entities, unless the Company is the surviving entity or the surviving entity assumes all of the
Company’s obligations in connection with the securitization transaction and certain other conditions are
satisfied, (v) limitations on indebtedness that may be incurred by the Company on a consolidated basis,
and (vi) recordkeeping, access to information and similar matters. The March 2007 Notes are also
subject to customary events of default, including events relating to non-payment of interest and
principal due on or in respect of the March 2007 Notes, failure to comply with covenants within certain
time frames, certain bankruptcy events, breach of representations and warranties, failure of security
interest to be effective, a valid claim being made under the relevant insurance policy and the failure to
meet the applicable debt service coverage ratio.
March 2007 Use of Proceeds
The net proceeds from the sale of the March 2007 Fixed Rate Notes on March 16, 2007 were
$171.7 million. Of this amount, $114.2 million was used to repay existing indebtedness of the Company;
$2.4 million was deposited into an interest reserve account for the Series 2007-1 FRN; and $3.1 million
was deposited into a lease payment account for payment to third-party property lessors. The Company
used the remaining proceeds primarily to pay the costs of the transaction and for share repurchases. As
of December 31, 2008, a total of $15.0 million was drawn on the Series 2007-2 VFN which was used as
part of the payment for the Applebee’s acquisition.
November 2007 Securitization Transactions
As part of the financing for the Applebee’s acquisition, certain subsidiaries of the Company
completed two separate securitization transactions with total proceeds of $2.039 billion. The
securitization transactions consisted of an issuance of debt collateralized by Applebee’s restaurant assets
and a separate issuance of debt collateralized by IHOP restaurant assets under the IHOP securitization
program.
Applebee’s Securitization
On November 29, 2007, Applebee’s Enterprises LLC, Applebee’s IP LLC and other wholly-owned
subsidiaries of Applebee’s (collectively, the ‘‘Applebee’s Co-Issuers), completed a $1.794 billion
securitization transaction as described below. All of the notes issued in the Applebee’s securitization
were issued pursuant to an indenture (the ‘‘Applebee’s Base Indenture’’), and entered into by and
among the Applebee’s Co-Issuers and Wells Fargo Bank, and the related Series 2007-1 Supplement,
each dated as of November 29, 2007 (together with the Applebee’s Base Indenture, the ‘‘Applebee’s
Indenture’’).
Fixed Rate Notes
The Applebee’s securitization consists of the following four classes of fixed rate notes (the
‘‘Applebee’s November 2007-1 Notes’’):
• $350 million of Series 2007-1 Class A-2-I-X Fixed Rate Term Senior Notes, which do not have
the benefit of a financial guaranty insurance policy. These notes had an expected life of
approximately six months, with a legal maturity of 30 years. The Class A-2-I-X Fixed Rate Term
Senior Notes were repaid in July 2008.
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