DineEquity shares continue slide to year low

Shares slid $2.07, or 12.9 percent, to $14.03. The stock bottomed at $14 earlier in the day. Shares had traded between $14.91 and $67.46 in the past year.

The stock has dropped 32 percent in the past two weeks. Investors have trampled the shares as lenders have become more cautious about financing restaurant franchisees.

DineEquity, which is saddled with a large amount of debt from buying the Applebee's chain last year, could be affected since it is in the midst of a large-scale campaign to sell company-owned restaurants to franchisees, a process called refranchising. The proceeds from those sales are being used to pay down debt from the acquisition.

The company has said as recently as this week it is still on track to meet its target of closing the sale of 100 company-owned locations this year.

Raymond James analyst Bryan C. Elliott said in a note to investors that the credit crisis "increases the challenges" of refranchising the Applebee's locations.

Investors have also been more focused on the Glendale, Calif., company's debt covenants, which are promises in a debt agreement that are meant to give lenders more security. Covenants can include requirements that working capital be at a certain level or that debt to earnings ratios be above or below certain thresholds.

In its second-quarter conference call, DineEquity sought to allay investors' fears, saying it will be able to meet its debt covenants.

Elliott said despite the risks, DineEquity is a "substantial free cash flow generator."

The analyst has an "Outperform" rating on the stock with a $28 price target.