Zacks_Analysts' Blog : DineEquity Prices $825M Offering - Analyst Blog

DineEquity Inc. (DIN), the owner of Applebee’s Neighborhood Grill & Bar and IHOP restaurants, announced the pricing of $825 million senior unsecured notes, which were offered on September 20, 2010. The senior notes bear an interest rate of 9.5% and will mature in eight years. The senior note offering is expected to close on October 19, 2010.



The company plans to use the sale proceeds from the offering to finance a simultaneously announced cash tender offer, as well as buy back debt from its subsidiaries and for related transactions. The notes will be issued to the public at a price of 100% of principal amount and will be guaranteed by its subsidiaries.



As of June 30, 2010, long-term debt, excluding current liability, of the company was $1.56 billion, down from $1.64 billion as of December 31, 2009. The outstanding debt includes series of senior notes issued in 2007 with different interest rate and the final maturity date is December 2037. At the end of second quarter 2010, cash and cash equivalents of the company stood at $64.1 million versus $82.3 million at the end of fiscal year 2009.



Apart from paying down the company’s high-cost debt, the increased offering will raise available fund and extend the maturity period of debt.



We have a Zacks #4 Rank (short-term Sell recommendation) on the shares. We reiterate our long-term Neutral rating.



We have a Zacks #1 Rank (short-term Strong Buy recommendation) on the company’s prime competitors such as Biglari Holdings Inc (BH) and Jack in the Box Inc (JACK).