IHOP 2015 Annual Report Download - page 89

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
7. Long-Term Debt (Continued)
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extent permitted under the Indenture, the Class A-2 Notes will be repaid in September 2021 (the “Class A-2 Anticipated
Repayment Date”). If the Co-Issuers have not repaid or refinanced the Class A-2 Notes prior to the Class A-2 Anticipated
Repayment Date, additional interest will accrue on the Class A-2 Notes equal to the greater of (i) 5.00% per annum and (ii) a
per annum interest rate equal to the amount, if any, by which the sum of the following exceeds the Class A-2 Note interest rate:
(A) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on the Class A-2 Anticipated Repayment Date of the
United States Treasury Security having a term closest to 10 years plus (B) 5.00% plus (C) 2.150%.
The Notes are secured by the collateral described below under “Guarantees and Collateral.”
Variable Funding Notes
In connection with the issuance of the Class A-2 Notes, the Co-Issuers also entered into a revolving financing facility that
allows for the drawings of up to $100 million of Variable Funding Notes and the issuance of letters of credit. The Variable
Funding Notes were issued under the Indenture and allow for drawings on a revolving basis. Drawings and certain additional
terms related to the Variable Funding Notes are governed by the Class A-1 Note Purchase Agreement dated as of September 30,
2014 (the “Variable Funding Note Purchase Agreement”), among the Co-Issuers, the Guarantors , certain conduit investors,
financial institutions and funding agents, and Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. (“Rabobank
Nederdland”), New York Branch, as provider of letters of credit, as swingline lender and as administrative agent.
The Variable Funding Notes will be governed, in part, by the Variable Funding Note Purchase Agreement and by certain
generally applicable terms contained in the Indenture. Depending on the type of borrowing by the Co-Issuers, the applicable
interest rate under the Variable Funding Notes is calculated at a per annum rate equal to (a) LIBOR plus 2.50%, (b) (i) the
greatest of (x) the prime rate, (y) the federal funds effective rate plus 0.50% or (z) a daily rate equal to one month LIBOR plus
0.5% plus (ii) 2.00% or (c) the lenders’ commercial paper funding rate plus 2.50%. There is a scaled commitment fee based on
the unused portion of the Variable Funding Notes facility of between 50 to 100 basis points. It is anticipated that the principal
and interest on the Variable Funding Notes will be repaid in full on or prior to September 2019 (the “VFN Anticipated
Repayment Date”), subject to two additional one-year extensions at the option of the Company, which acts as the manager (as
described below), upon the satisfaction of certain conditions. Following the VFN Anticipated Repayment Date (and any
extensions thereof), additional interest will accrue on the Variable Funding Notes equal to 5.00% per annum. The Variable
Funding Notes and other credit instruments issued under the Variable Funding Note Purchase Agreement are secured by the
collateral described below under “Guarantees and Collateral.”
The Company did not draw on the Variable Funding Notes during 2015 or 2014. As of December 31, 2015 there were no
amounts outstanding under the Revolving Facility; however, available borrowing capacity under the Variable Funding Notes
was reduced by $5.9 million of letters of credit outstanding as of December 31, 2015.
Guarantees and Collateral
Under the Guarantee and Collateral Agreement dated September 30, 2014 (the “Guarantee and Collateral Agreement”),
among the Guarantors in favor of the Trustee, the Guarantors guarantee the obligations of the Co-Issuers under the Indenture
and related documents and secure the guarantee by granting a security interest in substantially all of their assets.
The Notes are secured by a security interest in substantially all of the assets of the Co-Issuers and the Guarantors
(collectively, the “Securitization Entities”). On September 30, 2014, these assets (the “Securitized Assets”) generally included
substantially all of the domestic revenue-generating assets of the Corporation and its subsidiaries, which principally consist of
franchise agreements, area license agreements, development agreements, franchisee fee notes, equipment leases, agreements
related to the production and sale of pancake and waffle dry-mixes, owned and leased real property and intellectual property.
The Notes are obligations only of the Co-Issuers pursuant to the Indenture and are unconditionally and irrevocably
guaranteed by the Guarantors pursuant to the Guarantee and Collateral Agreement. Except as described below, neither we nor
any of our subsidiaries, other than the Securitization Entities, will guarantee or in any way be liable for the obligations of the
Co-Issuers under the Indenture or the Notes.