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IHOP Announces Sale of 41 Company-Operated Applebee's Restaurants in Southern California and Nevada
GLENDALE, CA, March 19, 2008 (MARKET WIRE via COMTEX News Network) -- IHOP Corp.
(NYSE: IHP) ("the Company") today announced that it has reached
agreement with Apple American Group LLC for the sale of 41
company-operated Applebee's restaurants located in Southern California
and Nevada. The agreement is reflected in two definitive asset purchase
agreements, one for the Southern California market and one for the
Nevada market. The agreements also provide for future franchise
restaurant development in these markets, which could result in the
development of as many as 14 new Applebee's restaurants by the end of
2012 throughout Southern California and within the state of Nevada.
Financial details of the transaction were not disclosed.
Julia A. Stewart, IHOP Corp.'s chairman and chief executive officer,
said, "We are pleased to announce the sale of our first
company-operated markets in line with our strategy to transform
Applebee's into an even more highly franchised system. This concludes a
competitive bidding process for these markets with the selection of
Apple American Group, which places these restaurants in the hands of an
exceptional franchise operator and provides growth opportunities for
the leading restaurant developer within the Applebee's system. We
believe today's commitment by Apple American Group demonstrates our
franchisees' confidence in our plans to revitalize the Applebee's brand
and improve the operational and financial performance of our
restaurants. We are eager to work with Apple American Group to ensure a
smooth and successful transfer of ownership for our field and
restaurant employees."
Gregory G. Flynn, Apple American's founder, chairman and chief
executive officer, said, "As Applebee's largest franchisee, we are
pleased to be the first partner to extend our relationship and
commitment to the Applebee's brand with the acquisition of these
company-operated restaurants. While it enables Apple American Group to
further leverage our infrastructure, it also affords us an opportunity
to participate in the revitalization of the Applebee's brand in a
significant way. Applebee's new ownership by IHOP Corp. and the
approach leadership intends to take to re-energize the brand were
integral in our decision to acquire additional restaurants. We are
excited about the future prospects of the Company and look forward to
working closely with management as we improve the performance of the
Applebee's brand."
The sale of these two markets is expected to be completed on separate
closing dates in the coming months, subject to regulatory processes
related to liquor license transfer and other customary closing
conditions.
IHOP Corp. remains confident in its expectations of selling
approximately 100 company-operated Applebee's restaurants and
generating a total of $90 to $100 million in after-tax cash proceeds in
fiscal 2008, as previously announced. The Company plans to use the
proceeds from the franchising of its company-operated Applebee's
restaurants primarily to repay a portion of the Company's consolidated
funded debt, among other obligations. In addition, IHOP Corp.'s
objective is to conclude fiscal 2008 with as many as 60 additional
purchase commitments of Applebee's company-operated restaurants, which
would be expected to close sometime in early 2009.
About IHOP Corp.
Based in Glendale, California, IHOP Corp. franchises and operates
restaurants under the International House of Pancakes, or IHOP, and the
Applebee's Neighborhood Grill & Bar brands. With more than 3,300
restaurants combined, IHOP Corp. is the largest full-service restaurant
company in the world. IHOP Corp.'s common stock is listed on the NYSE
under the symbol "IHP." For more information on IHOP Corp., visit the
Investor Relations section of the Company's Web site located at www.ihop.com.
About Apple American Group LLC
Based in San Francisco, California, Apple American Group LLC currently
owns and operates 145 Applebee's Neighborhood Grill and Bar restaurants
in California, Washington State, Indiana, Ohio, Pennsylvania, West
Virginia, Delaware and New Jersey. With $380 million in 2007 sales and
directly employing over 9,600 people, Apple American Group is the
largest franchisee in the Applebee's system and the 3rd largest
restaurant franchisee in the United States. In 2007, it was named
Franchisee of the Year by Applebee's International and Franchisee
Entrepreneur of the Year by Nation's Restaurant News. It has
perennially ranked as one of Applebee's best operators and most active
developers, and it has enjoyed sales growth in excess of 15% per year
compounded over the last 10 years. For more information on Apple
American Group, visit www.appleamerican.com.
Forward-Looking Statements
There are forward-looking statements contained in this news release.
They use such words as "may," "will," "expect," "believe," "plan," or
other similar terminology, and include statements regarding the
strategic and financial benefits of the acquisition of Applebee's
International, Inc., expectations regarding integration and cost
savings, and other financial guidance. These statements involve known
and unknown risks, uncertainties and other factors, which may cause the
actual results to be materially different than those expressed or
implied in such statements. These factors include, but are not limited
to: the implementation of the Company's strategic growth plan; the
availability of suitable locations and terms for the sites designated
for development; the ability of franchise developers to fulfill their
commitments to build new restaurants in the numbers and time frames
covered by their development agreements; legislation and government
regulation including the ability to obtain satisfactory regulatory
approvals; risks associated with executing the Company's strategic plan
for Applebee's; risks associated with the Company's incurrence of
significant indebtedness to finance the acquisition; the failure to
realize the synergies and other perceived advantages resulting from the
acquisition; costs and potential litigation associated with the
acquisition; the ability to retain key personnel after the acquisition;
conditions beyond the Company's control such as weather, natural
disasters, disease outbreaks, epidemics or pandemics impacting the
Company's customers or food supplies or acts of war or terrorism;
availability and cost of materials and labor; cost and availability of
capital; competition; continuing acceptance of the IHOP, International
House of Pancakes and Applebee's brands and concepts by guests and
franchisees; the Company's overall marketing, operational and financial
performance; economic and political conditions; adoption of new, or
changes in, accounting policies and practices; and other factors
discussed from time to time in the Company's news releases, public
statements and/or filings with the Securities and Exchange Commission,
especially the "Risk Factors" sections of Annual and Quarterly Reports
on Forms 10-K and 10-Q, as well as releases, statements and SEC filings
by Applebee's International, Inc. prior to its acquisition by the
Company. Forward-looking information is provided by IHOP Corp. pursuant
to the safe harbor established under the Private Securities Litigation
Reform Act of 1995 and should be evaluated in the context of these
factors. In addition, the Company disclaims any intent or obligation to
update these forward-looking statements.
Contact:
Stacy Roughan
Director, Investor Relations
IHOP Corp.
818-637-3632
SOURCE: IHOP Corp.
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