Wendy's to sell 500 units to cut spending

Wendy's Co (WEN.O), the No. 3 U.S. hamburger chain by sales, said it would sell about 500 restaurants to franchisees and reduce company ownership of its outlets to about 5 percent by mid-2016.

The company's shares rose as much as 10.5 pct to a more than seven-year high of $11.50 in early trading.

Wendy's, known for its square beef burgers and thick "Frosty" milkshakes, has been selling company-owned restaurants to franchisees to cut costs and fund a long-term image overhaul.

The company, which sold 237 restaurants to franchisees in 2014, owned 957 of 6,515 Wendy's branded restaurants as of Dec. 28.

The sale of the 500 restaurants is expected to generate pretax proceeds of $400 million to $475 million and significantly reduce capital expenditure requirements, Wendy's said in a statement on Tuesday.

The company said it plans to use the proceeds and improved cash flow to recapitalize its balance sheet, and then take on debt to return "substantial cash to shareholders" in 2015.

Wendy's returned $375 million to shareholders through dividends and share repurchases in 2014, Buckingham Research Group analyst Matthew DiFrisco wrote in a note, adding that he expected the company to return $1 billion more.

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