DineEquity Inc. (DIN) said it has reached three preliminary deals to refranchise a combined 86 company-owned Applebee's restaurants, continuing its effort to move to a franchisee operating model.
Since IHOP bought Applebee's in 2007 to form DineEquity, the company has been selling company-owned Applebee's restaurants to help pay down debt. As of June 30, it had total debt of about $2.2 billion.
The potential sales in the latest deals include 36 locations in St. Louis, 20 in Virginia and 30 in the Washington D.C. market. DineEquity said in a filing Wednesday with the Securities and Exchange Commission that it would continue to have a significant amount of debt after the transactions are completed.
The company refranchised 110 Applebee's since the merger through June 30, leaving 393, or 20%, of the chain's total number of locations. A deal is in place to sell 63 in Minnesota and Wisconsin and is slated to close in the fourth quarter. But DineEquity noted Wednesday that if the deal is terminated by mid-November, the company won't be able to carry out plans to redeem $28 million of preferred stock.
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