Oct. 26 (Bloomberg) -- Wendy's International Inc., the U.S. hamburger chain that's been seeking a buyer since April, said its proposed sale has been delayed because of turmoil in credit markets and added that it may give an update on the process soon.

``We acknowledge that the process is taking longer than we originally anticipated, and this is due in part to the well- publicized uncertainty in the debt-capital markets,'' Chief Financial Officer Jay Fitzsimmons said today on a call with analysts and investors.

Wendy's formed a special committee to explore a sale six months ago after billionaire investor Nelson Peltz, whose fund is the company's largest shareholder, urged management to boost profit and cut costs. ``We believe there will be more clarity relatively soon,'' Fitzsimmons said of the committee's work.

``The valuation of a potential transaction will hinge as much on the credit markets as it does on fundamentals,'' John Glass, an analyst at CIBC World Markets, wrote yesterday in a note. He has a ``sector performer'' rating on the stock.

The third-largest U.S. restaurant chain yesterday reported third-quarter profit from continuing operations rose 22 percent and said annual earnings may be at the ``high'' end of its previous estimate as it lowers restaurant costs and boosts sales. The gains may help Wendy's negotiate a higher price with potential buyers, according to analysts.

Companies face increased borrowing costs and stricter lending standards because of the collapse of subprime mortgages, which are made to people with poor credit or high levels of debt.

Wendy's rose 57 cents, or 1.7 percent, to $34.60 at 4:03 p.m. in New York Stock Exchange composite trading.

Higher Commodity Costs

Restaurant chains continue to have higher commodity prices. In the fourth quarter, Wendy's expects costs for French fries to increase 11 percent to 13 percent and dairy to rise as much as 7 percent from a year earlier, Fitzsimmons said.

``We are expecting the price of French fries to be the biggest drivers of upward pressure,'' the finance chief said. Beef may be a nickel per pound higher in the quarter, he said.

Costs for commodities, particularly for beef, poultry and pork, have risen as corn prices climbed because of increased demand for the grain from ethanol makers. Corn is used to make sweeteners and ethanol as well as animal feed.

Wendy's began selling breakfast items last year and now offers them at more than 850 restaurants. It wants to compete with larger McDonald's Corp. and Burger King Holdings Inc., which added products on their morning menus. Wendy's will expand the breakfast selection to 1,000 stores by year end, Chief Executive Officer Kerrii Anderson said on the call.

Peltz's Trian Fund Management LP is the company's largest shareholder.

Wendy's shares have gained 4.6 percent this year, compared with a 32 percent jump for McDonald's, the world's largest restaurant chain, and a 21 percent gain by Burger King.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net

Last Updated: October 26, 2007 16:21 EDT