IHOP 2010 Annual Report Download - page 126
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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Debt (Continued)
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 was substantially similar to the structure for the
Series 2007-1 FRN and Series 2007-2 VFN.
Third Party Credit Enhancement
The Series 2007-3 FRN did not have any third party credit enhancement. Covenants/Restrictions
The covenants under the Indenture and applicable to all notes were modified with the consent of the
holders of the Series 2007-1 FRN.
Prepayment Penalties
In the event a significant portion of the securitization debt was repaid prior to December 2012, the
Company may have been liable for certain make-whole prepayment penalties with respect to the
securitization debt and the applicable insurance policies. The amount of any prepayment penalty with
respect to the securitization debt would have been determined based upon, among other things, the
date of repayment, prevailing benchmark interest rates at the time of repayment and the percentage of
debt repaid.
Weighted Average Effective Interest Rate
The weighted average effective interest rate on all of the notes issued in the November 2007
securitization transactions, exclusive of the amortization of fees and expenses associated with the
securitization transactions, was 7.1799%. Taking into account fees and expenses (excluding the interest
rate swap transaction discussed below) associated with the securitization transactions that were
amortized as additional non-cash interest expense over a five-year period, which was the expected life
of the notes, the weighted average effective interest rate for the notes issued in November 2007
securitization transactions was 8.4571%.
Covenants/Restrictions Compliance
The Company was in compliance with all the covenants/restriction related to the March 2007 and
November 2007 securitized notes for each month since issuance of the securitized notes up until the
time of retirement of these notes in October 2010.
Discount on Notes
The discount on notes reflected the difference between the proceeds received from the sale of the
notes and the face amount to be repaid over the life of the notes. The discount was amortized as
additional interest expense over the estimated life of the notes under the effective interest method. The
unamortized balance of $12.5 million was charged against income as part of loss on the retirement of
the related debt in October 2010.
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