Tuesday, October 10, 2006

Breeden Partners Confirms 5.2% Stake in Applebee's (APPB), Says Company is Underperforming

Breeden Partners issued a press released discussing their recently acquired 5.2% stake in Applebee's International, Inc. (Nasdaq: APPB) as we noted earlier in from the 13D filing with the SEC.

Breeden said, "Breeden Partners believes that Applebee's is a fundamentally strong and vibrant business that is currently valued significantly below its potential. The Company operates successful restaurants and has a superb network of franchise owners. Breeden Partners is very pleased to join the Applebee's Neighborhood. However, Breeden Partners also believes that Applebee's has not paid adequate attention to shareholder interests in recent years, and that its share price suffers from poor decisions on allocation of capital to company-owned restaurants and real estate holdings with low returns, as well as from high corporate general and administrative costs and certain undesirable governance and compensation practices.

We hope to assist the company in understanding the imperative to reduce corporate overhead and to use capital that can be freed up by the sale of non-earning assets like real estate and by refranchising company-owned restaurants to repurchase shares at today's low values. Now that the company has finally put in place a new management team, we believe that it needs to move with a sense of urgency to take advantage of opportunities for improving its return to shareholders. The reforms we suggest will help Applebee's become as good at delivering value to its shareholders as it already is in delivering great value to its casual dining customers. The goal of all concerned should be to build a great company, not just great restaurants."

Breeden Partners is managed by Breeden Capital Management in Greenwich, Connecticut. Both Breeden Partners and Breeden Capital Management were founded by former SEC Chairman Richard C. Breeden and a group of partners who work actively in the business.

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