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Krispy Kreme Doughnuts, Inc. Message Board

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  • delaurenthis delaurenthis May 24, 2004 3:51 PM Flag

    Krispy Kreme Secondary, part 2

    Several of us on this board had been waiting a secondary for a while now. Actually, it was amazing they didn't do one when the stock was in the $40s. But now it is a different story. The stock probably would take a big hit after the announcent. There must had been a reason why they didn't do the secondary before (suggestions welcome). That same reason probably remains.

    I don't recall any similar situations, but I suppose it is a bad idea to propose a secondary for a stock that is believed to be in trouble (like KKD). Lawyers would probably have a field day with that one.

    Maybe what the longs should do is demand that the people that looted your company give the cash back and KKD will give them their stores back! Wouldn't that be justice?

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    • Any comments on my previous post?

      by: breadman5520032003
      Long-Term Sentiment: Strong Sell 05/09/04 03:45 pm
      Msg: 89949 of 92343

      Tate should have the answers. He was on the Montana Mills Board at the time of KKD's purchase. Any chance of the O'Donovan's spending their $21 million to buy back Montana Mills. They know the business.

      Over one year ago, the handwriting was on the wall.

      Re: A question, if anyone is still out there?
      by: breadman5520032003 04/27/03 07:59 am
      Msg: 364 of 367 (MMX message Board)

      "Can anyone provide any insight as to Montana Mill's future impact on KKD? The acquisition of MMX took place within the last couple of weeks without much fanfare. It's been quiet. I haven't seen any public relations efforts from either KKD or MMX as to the deal being completed.

      For slightly over $41 million KKD purchased a struggling upstate New York chain of 22 stores that had never made a profit. MMX had completed an IPO less than one year ago. Less than two months prior to the deal closing, MMX abrubtly closed nine stores on March 19th. The closings occurred after MMX's qtr. ended. Although MMX's quarter ended approximately at the same time as KKDs, MMX NEVER released their 4th qtr. and/or year-end results which would have been as of 1/31/03. It would appear that Montana Mills was able to "sell out" and close the deal prior to the 90 days that they would have been required to report. The qtr. and year-end results might have been very interesting but may never publically be known.

      At what point will we be able to identify if the addition of MMX will adversely impact our KKD shares? With the closing of the MMX's (9)nine stores the absolute sales contribution of the newly acquired company will no doubt be less than originally had been planned. However, the purchase price remained the same as had been agreed to when MMX had 31 outlets. I would doubt that the remaining 22 stores could make up the volume. It's not even clear that same store sales would/could grow without an aggressive effort to expand into grocery outlets which are not generally as profitable.

      It's interesting that O'Donovan didn't close the stores on his own before he "bailed out". What could have changed his thinking between the time that he agreed to sell and the time that he abruptly closed the stores?

      I guess any costs associated with the closing of the MMX stores just "fall through the cracks" as they are quietly written off prior to the deal closing. Is this what happens?

      What objective could KKD management have had in "bailing out" the O'Donovans? It is clear that the concept that the O'Donovan's had taken from Great Harvest was not working as a company store operation. It was not profitable. Someone decided that MMX should close almost 1/3 of its stores before the deal closed with KKD. What is the implication?

      MMX's management has not been particularly competant as manifest in the company's extremely poor profit performance. Less than a year after an IPO, the founder was being willing to sell the other shareholders out at a discount. As KKD shareholders, this should raise a real concern as to the long-term viabity of MMX and how we are better off parting with over 1.2 million shares of our stock.

      I only hope that KKD's management doesn't rely on the O'Donovan's to execute KKD's bakery/cafe concept as a means of helping to achieve KKD's sales growth objectives. The O'Donovan's have never demonstrated an ability to build a strong and lasting franchise/ company. Nor have they demonstrated a talent to create a new and unique vision. They built the MMX company all on another company's business model.

      Although "creative accounting" could well be O'Donovan's greatest contribution, I don't believe that this talent is worth the $41 million that our KKD management paid for MMX. KKD seems to be quite capable in this area al

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