Investment Opportunity
The International House of Pancakes (IHOP) has a strong brand identity and a very loyal following, and has operated in a very stable, non-faddish segment of the restaurant business. In recent years, IHOP Corp. has made significant senior management changes, which included bringing in a seasoned, experienced and aggressive management team from other large franchised food concepts. As a result, IHOP Corp. brought in significant institutional investor support for its growth plans, and began investing heavily in the brand. These initiatives have generated strong same-store sales growth since 2003. IHOP also has few large franchisees who have the financial resources to meet IHOP Corp.’s growth objectives.

Business Description
CFRA Restaurant Holdings, Inc., which began in 1991, is one of the five largest franchisees in the U.S. and is the largest IHOP franchisee in the Southeast, with 41 restaurants in North and South Carolina, Tennessee, Virginia and Alabama. The restaurants are primarily located in markets which are underpenetrated by IHOP and are rapidly growing, including Charlotte, Raleigh, Winston-Salem and the I-40 corridor of North Carolina; Spartanburg and Columbia, South Carolina; Williamsburg, Virginia; and Nashville, Tennessee. The Company has a strong management team which is prepared to handle significant growth, including two Vice Presidents of Operations with significant restaurant experience and a seasoned CFO. The Company has won numerous awards from IHOP Corp., including Regional Franchisee of the Year.

Transaction Description
In May 2005, Prometheus acquired a majority interest in CFRA Restaurant Holdings, Inc. The deal was structured with approximately 50% of debt and 50% of equity.

Prometheus arranged a senior term loan from GE Capital Franchise Finance with an additional credit facility to help finance future acquisitions and new store growth. In addition, the Seller provided the majority of the subordinated debt.

The Company possesses opportunities for growth not only internally by building stores within the Company’s existing markets, but also through the acquisition of other franchisees.