GLENDALE Calif. Applebee’s Neighborhood Grill & Bar parent DineEquity Inc. has completed the sale and leaseback of 181 locations in a transaction that generated about $296 million in after-tax cash proceeds, excluding about $5 million in transaction costs, officials said Tuesday.
Company officials previously had planned to sell and leaseback 191 restaurants with the goal of raising $350 million, but they said a lump transaction might not be possible because of weakened market conditions. That total was later revised to 187 units. Company officials said six units were not included in the transaction announced Tuesday for undisclosed “technical reasons,” but would likely be sold later.
The 181 locations were acquired by an entity owned by affiliates of Drawbridge Special Opportunities Fund LP and Drawbridge Real Assets Fund LP -- both of which are affiliates of Fortress Investment Group -- as well as Cardinal Capital Partners. Later, the company plans to franchise the units and leasehold obligations will be transferred to franchisees, further reducing expenses.
DineEquity also plans to accelerate for tax purposes the recognition of financing and interest rate swap related costs associated with its funded debt reduction. The move is expected to result in about a $12 million tax benefit that will partially offset the tax obligation of the sale-leaseback transaction and reduce consolidated funded debt by about $303 million.