IHOP 2013 Annual Report Download - page 102

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
7. Long-Term Debt (Continued)
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9.5% Senior Notes due 2018
On October 19, 2010, the Company issued $825.0 million aggregate principal amount of its 9.5% Senior Notes due
October 30, 2018 (the “Notes”) pursuant to an Indenture (the “Indenture”), by and among the Company, the Guarantors and
Wells Fargo Bank, National Association, as trustee (the “Trustee”). The Notes are unsecured senior obligations of the Company
and are jointly and severally guaranteed on a senior unsecured basis by the Guarantors under the Credit Agreement.
Interest/Effective Interest
The Notes bear interest at the rate of 9.5% per annum. Interest on the Notes is payable on April 30 and October 30 of each
year, beginning on April 30, 2011. Taking into account fees and expenses associated with the Notes that will be amortized as
additional non-cash interest expense over an eight-year period, the weighted average effective interest rate for the Notes as of
December 31, 2013 was 10.9%.
Prepayment
The Company may redeem the Notes for cash in whole or in part, at any time or from time to time, on and after
October 30, 2014, at specified redemption premiums, plus accrued and unpaid interest, as specified in the Indenture. In
addition, prior to October 30, 2014, the Company may redeem the Notes for cash in whole or in part, at any time and from time
to time, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make-whole”
premium, as specified in the Indenture. The make-whole payment was approximately $92.1 million at December 31, 2013. The
make-whole payment will decline progressively to $36.1 million as of October 30, 2014 and remain at that amount until
October 30, 2015. The make-whole payment then will decline in two step-downs, first to $18.1 million on October 30, 2015
and to zero on October 30, 2016.
In addition, prior to October 30, 2013, the Company could redeem up to 35% of the aggregate principal amount of Notes
issued with the net proceeds raised in one or more equity offerings. If the Company undergoes a change of control under certain
circumstances, the Company may be required to offer to purchase the Notes at a purchase price equal to 101% of the principal
amount plus accrued and unpaid interest. If the Company sells assets under certain circumstances, the Company may be
required to offer to purchase the Notes at a purchase price equal to 100% of the principal amount plus accrued and unpaid
interest.
Covenants/Restrictions
The Indenture limits the ability of the Company and its restricted subsidiaries to incur additional indebtedness (excluding
certain indebtedness under the Credit Facility), issue certain preferred shares, pay dividends and make other equity
distributions, purchase or redeem capital stock, make certain investments, create certain liens on its assets to secure certain
debt, enter into certain transactions with affiliates, agree to any restrictions on the ability of the Company's restricted
subsidiaries to make payments to the Company, merge or consolidate with another company, transfer and sell assets, engage in
business other than certain permitted businesses and designate its subsidiaries as unrestricted subsidiaries, in each case as set
forth in the Indenture. These covenants are subject to a number of important limitations, qualifications and exceptions,
including that during any time that the Notes maintain investment grade ratings, certain of these covenants will not be
applicable to the Notes.
The Indenture also contains customary event of default provisions including, among others, the following: default in the
payment of the principal of the Notes when the same becomes due and payable; default for 30 days in the payment when due of
interest on the Notes; failure to comply with certain covenants in the Indenture, in some cases without notice from the Trustee
or the holders of Notes; and certain events of bankruptcy or insolvency with respect to the Company or any significant
restricted subsidiary, in each case as set forth in the Indenture. In the case of an event of default, other than a bankruptcy default
with respect to the Company, the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by written notice to the Company (and to the Trustee if the notice is given by the holders of the Notes), may, and
the Trustee at the written request of the holders of at least 25% in aggregate principal amount of the Notes then outstanding
shall, declare the principal of and accrued interest on the Notes to be immediately due and payable.
Restricted Payments
The Credit Agreement contains covenants considered customary for similar types of facilities that limit certain permitted
restricted payments, including those related to dividends on and repurchases of our common stock. Such restricted payments
are limited to a cumulative amount comprised of (i) a general restricted payments allowance of $35.0 million, plus (ii) 50% of
Excess Cash Flow for each fiscal quarter in which the consolidated leverage ratio is greater than 5.75:1; (iii) 75% of Excess