IHOP 2008 Annual Report Download - page 120

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
10. Debt (Continued)
November 2007-1 Notes and any other obligations of such subsidiaries arising in connection with the
issuance of the Applebee’s November 2007-1 Notes.
Third Party Credit Enhancement
The Series 2007-1 Class A-2-II-A Fixed Rate Term Senior Notes of $675 million were rated ‘‘Aaa,’’
and ‘‘AAA’’ by Moody’s Investors Services, Inc. and Standard & Poor’s Ratings Services, respectively.
Timely payment of interest (other than contingent interest) and the outstanding principal of the
Series 2007-1 Class A-2-II-A Fixed Rate Term Senior Notes are insured under a financial guaranty
insurance policy issued by Assured Guaranty Corp. (‘‘Assured’’). The insurance policy has been issued
under an Insurance and Indemnity Agreement among Assured, the Company and various subsidiaries
of the Company.
Covenants/Restrictions
The Applebee’s November 2007-1 Notes are subject to a series of covenants and restrictions under
the Applebee’s Indenture which are customary for transactions of this type, including those relating to
(i) the maintenance of specified reserve accounts to be used to make required payments in respect of
the Applebee’s November 2007-1 Notes, (ii) certain debt service coverage and consolidated leverage
ratios to be met, the failure of which may result in early amortization of the outstanding principal
amounts due in respect of the Applebee’s November 2007-1 Notes or removal of Applebee’s
Services, Inc., as servicer, among other things, (iii) optional prepayment subject to certain conditions,
(iv) a restriction on the Company’s merger with 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 Applebee’s November 2007-1 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
Applebee’s November 2007-1 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.
IHOP Securitization
Series 2007-3 Fixed Rate Notes
On November 29, 2007, the IHOP Co-Issuers issued $245 million of Series 2007-3 Fixed Rate
Notes (the ‘‘Series 2007-3 FRN’’) in a securitized financing transaction. The Series 2007-3 FRN have
an expected life of five years, with a legal maturity of 30 years. This issuance was the third issuance of
debt securities by the IHOP Co-Issuers pursuant to a securitization structure established on March 16,
2007.
The Series 2007-3 FRN were issued by the IHOP Co-Issuers, which hold substantially all of the
intellectual property and franchising assets of the IHOP system. The servicing and repayment
obligations related to the Series 2007-3 FRN and certain on-going fees and expenses are solely the
responsibility of the IHOP Co-Issuers. DineEquity, Inc., which is the ultimate parent of each of the
IHOP Co-Issuers, has not guaranteed and is not in any way liable for the obligations of the IHOP
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