IHOP 2009 Annual Report Download - page 124

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Debt (Continued)
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.
If the Company is unable to refinance the Series 2007-3 IHOP securitization debt by December
2012, then the Company will have the ability to extend the scheduled repayment date for six months if
in compliance with applicable covenant ratios and system-wide sales levels at that time. Upon
extension, the interest rate on the Series 2007-3 IHOP securitization debt will increase by 0.50% and
any unpaid amount will accrue interest at such increased rate.
In the event that the Company is unable to refinance the Series 2007-3 IHOP securitization debt
by December 2012, or, if an extension has been obtained and the Company is unable to refinance the
Series 2007-3 IHOP securitization debt by June 2013, the debt will go into rapid amortization, and all
excess cash flow (after defined required payments have been made) will be retained by the indenture
trustee for the securitization and used to retire principal amounts of debt.
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
Co-Issuers, including the Series 2007-3 FRN, the March 2007 Notes or any other obligations of the
IHOP Co-Issuers incurred in connection with the issuance of the Series 2007-3 FRN or the March 2007
Notes. The Company does, however, guarantee the performance of International House of
Pancakes, LLC, as servicer for the IHOP securitization program.
All of the Series 2007-3 FRN issued in the IHOP securitization were issued under the IHOP Base
Indenture, as amended and supplemented from time to time, including by the related supplement to
the IHOP Base Indenture dated as of November 29, 2007.
Securitization Structure
The securitization structure for Series 2007-3 FRN is substantially similar to the structure for the
Series 2007-1 FRN and Series 2007-2 VFN.
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