Wendy's Weighing Sale Leaseback of Company Owned Restaurants

New York Sun / Dow Jones Newswires - October 13, 2006

Wendy's International Inc. said Thursday it would conduct a tender offer for as much as $800 million of its shares later this year using a modified Dutch auction. The move disclosed the company's long-anticipated determination of how it planned to spend $1 billion plus it received from the recent spinoff of Tim Hortons Inc. Interim Chief Executive Kerrii Anderson told investors at a briefing in New York that over the next 18 to 24 months Wendy's intends to return $1 billion to shareholders.

Elaborating on plans to improve what one executive termed its "fuzzy" flagship brand's image, Wendy's intends to invest about $60 million a year over the next five years to upgrade and renovate company-operated restaurants. It also plans to allocate $100 million over that period to buy restaurants from franchisees, renovate them and then sell them to what it called "proven operators."

To encourage franchisees to remodel their restaurants, the company said it would pay those who do so $25,000. That program could cost Wendy's $25 million a year near-term, Mrs. Anderson said.

Mrs. Anderson said Wendy's is studying the possibility of expanding its limited presence internationally, another area where rivals such as McDonald's Corp. and Yum Brands Inc. hold significant leads.

Over the next three years Wendy's plans to franchise between 400 and 500 company-owned restaurants, with a goal of reducing the company units to about 1,000.

She said the Dublin, Ohio, fast-food operator also is exploring the saleleaseback of company-owned real estate. About 600 sites are on its books. Sphere: Related Content