DineEquity Inc. said Thursday it will suspend its quarterly cash dividend for the “foreseeable future” and use the money instead to pay down debt.
The Glendale-based operator and franchisor of 3,400 Applebee’s and IHOP restaurants said its board approved plans to reallocate the roughly $17 million in cash it has been paying in annual dividends on common stock.
IHOP Corp. bought Applebee’s International for $2.04 billion in 2007 and subsequently changed its name to DineEquity.
“Today’s financial market environment presents a unique opportunity for us to retire debt,” said Chief Executive Julia Stewart in a statement. “With this action, we expect to further accelerate the reduction of our consolidated funded debt. We believe this is a prudent step that is expected to create value for shareholders over the long term.”
The company reported a third quarter loss of $16.4 million, compared with a loss of $11.6 million a year ago, largely due to ongoing expenses related to the Applebee’s purchase. That included laying off redundant staff and franchising many Applebee’s locations to lower costs.
DineEquity shares were down $1.59, or 10 percent, to $13.58 in morning trading on the New York Stock Exchange.
