AFC Enterprises, Inc., the franchisor and operator of Popeyes® Chicken & Biscuits, today announced that its board of has declared a special cash dividend of $12.00 per share of common stock payable on June 3, 2005 to stockholders of record at the close of business on May 23, 2005. In addition, AFC also announced that the company has completed its credit facility refinancing, consisting of a five-year revolving credit facility through which the company has $60 million of availability and a six-year $190 million Term Loan B.

The special cash dividend will be paid from a portion of the net proceeds from the completed sale of the company’s Church’s Chicken brand on December 28, 2004 as announced on December 29, 2004 and a portion of the net proceeds from AFC’s completed refinancing. The company used approximately $54 million from the refinanced credit facility to pay the outstanding debt balance under the terms of its previous credit facility. The refinanced facility was arranged by J.P. Morgan Securities Inc.

In accordance with amendments to the company’s stock option plans recently approved by the shareholders at AFC’s 2005 annual shareholder meeting, the exercise price and number of shares associated with each of the company’s employee stock options will be adjusted to preserve the value of the options after the special cash dividend.

“Rewarding our shareholders with a special cash dividend of this magnitude is the direct result of successfully completing our strategic initiatives coupled with the lender community’s continued confidence in our ability to generate strong free cash flow,” says Frank Belatti, Chairman and CEO of AFC Enterprises.
Our franchise business model provides an opportunity for the company to continue to have ongoing financial flexibility.”

A NASDAQ National Market (“Nasdaq”) policy regarding the deferral of ex- dividend dates for large special dividends applies to the company’s special cash dividend. Specifically, pursuant to Nasdaq policy, June 6, 2005 will be the ex-dividend date for the special cash dividend. As a result, common shareholders who sell their shares after the record date, and through the payment date, also will be selling their right to receive the dividend.

Based on current estimates, AFC expects approximately 60 percent of the special cash dividend to be treated by shareholders as a return of capital for tax purposes with the remaining 60 percent treated as a dividend for federal income tax purposes. These estimates are subject to change because the company’s 2005 taxable income and gains will affect the tax treatment of the special cash dividend.

Shareholders are encouraged to consult with their financial advisors regarding the implications of the ex-dividend date and with their tax advisors regarding the tax treatment of the special cash dividend.