IHOP 2009 Annual Report Download - page 122

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Debt (Continued)
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.
• $675 million of Series 2007-1 Class A-2-II-A Fixed Rate Term Senior Notes that have the benefit
of a financial guaranty insurance policy covering payment of interest when due and payment of
principal at the applicable legal final maturity date. These notes have an expected life of
approximately five years, with a legal maturity of 30 years.
• $650 million of Series 2007-1 Class A-2-II-X Fixed Rate Term Senior Notes, which do not have
the benefit of a financial guaranty insurance policy. These notes have an expected life of
approximately five years, with a legal maturity of 30 years.
• $119 million of Series 2007-1 Class M-1 Fixed Rate Term Subordinated Notes, which do not
have the benefit of a financial guaranty insurance policy. These notes have an expected life of
approximately four years, with a legal maturity of 30 years.
The Applebee’s Indenture includes provisions which accelerate certain of the payment dates which,
if not met, would require the Company to use operating funds to begin to pay down the outstanding
debt. The accelerated payment date for the Applebee’s November 2007-1 Notes will occur in December
2012, unless accelerated by failure to comply with provisions of the Applebee’s Indenture. As of
December 31, 2009, there was no acceleration of payment dates.
In the event that the Company is unable to refinance the Applebee’s securitization debt by
December 2012, then the Company will have the ability to extend the scheduled payment date for six
months if in compliance with applicable covenant ratios at that time and, under certain circumstances,
if consent is obtained from the series controlling party. Upon an extension, the interest rate on the
Applebee’s securitization debt will increase by 0.50%, and any unpaid amount will accrue interest at
such increased rate and the insurance premium will increase by 0.1%.
In the event that the Company is unable to refinance the Applebee’s securitization debt by
December 2012, or, if an extension has been obtained and the Company is unable to refinance the
Applebee’s securitization debt by June 2013, the debt will go into rapid amortization and all excess cash
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