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DineEquity to offer $825M in senior notes

Company also reported positive sales trends at both brands

DineEquity Inc. said Wednesday it plans to offer up to $825 million in its senior unsecured notes, and also reported that same-store sales were up for both its Applebee’s and IHOP brands for most of the third quarter.

The notes, which are due in 2018, are expected to be guaranteed by DineEquity's current and future domestic subsidiaries, according to a statement from the Glendale, Calif.-based company.

The offering will be used to fund the earlier cash tender offers for outstanding amounts of certain principal amounts of notes to help refinance existing debt of DineEquity and its subsidiaries. Proceeds also will be used to satisfy and discharge the indentures governing certain securitization notes and to redeem, prepay or purchase any of the notes that are not tendered.

For the second quarter ended June 30, DineEquity officials said $80.7 million of securitized debt had been retired year-to-date, and the company had reduced its total outstanding debt levels by $405.5 million, or 16.4 percent, since the $1.9 billion acquisition of the Applebee's Neighborhood Grill & Bar chain in November 2007.

In a preview of earnings for the first 11 weeks of the third quarter, as of Sept. 19, DineEquity reported that systemwide domestic same-store sales were up 2.7 percent for Applebee’s and up 0.3 percent for IHOP.

For the 11-week period, Applebee’s same-store sales were up 3.2 percent at domestic franchised locations and up 0.7 percent at corporate locations. While guest check averages were higher at corporate stores because of a 1.2-percent price increase, guest traffic was down, DineEquity said.

Year-to-date, Applebee's same-store sales are down 0.5 percent at domestic franchised restaurants and down 2.0 percent at corporate stores.

Systemwide same-store sales are down 0.8 percent year-to-date, the company said. DineEquity reiterated previously stated projections of systemwide same-store sales between flat and down 3 percent for the brand in fiscal 2010. Franchisees are expected to open between 25 and 30 new Applebee's restaurants this year, the company said.

At IHOP, year-to-date same-store sales were down 0.4 percent. The company said it still expects systemwide same-store sales for the brand to range from up 1 percent to down 1 percent for the full year.

DineEquity said franchisees would open between 60 and 70 new IHOP restaurants this year.

The almost-all-franchised IHOP brand attributed its increase in same-store sales to marketing efforts, such as the limited-time Minion Madness promotional tie in with the movie “Despicable Me,” and the chain’s Kids Eat Free offer in August. As with Applebee's, IHOP’s higher average check was offset by declines in traffic in the quarter.

Full third-quarter results are scheduled for release Nov. 2.

At the end of the second quarter, DineEquity franchised or operated
3,450 restaurants under the two brands.

Contact Lisa Jennings at [email protected].

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