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Krispy Kreme Doughnuts, Inc. Message Board

  • di_vur_se_fi di_vur_se_fi Mar 11, 2005 5:32 PM Flag

    Hedge fund offers capital

    http://www.sec.gov/Archives/edgar/data/1100270/000100579405000184/schedule13d.tx
    t


    Richard Patton has contacted executive management of Issuer to
    express an interest in assisting Issuer in a capital raise or
    other financing transaction. No decisions were made with
    respect to this offer. If requested by Issuer, Courage Capital
    would be willing to assist Issuer in its capital raising
    efforts by causing accounts it manages to provide capital to
    the Issuer. Any such transaction might entail a provision
    whereby accounts managed by Courage Capital would acquire
    additional equity securities of Issuer.

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    • >>The fund has invested 70 million dollars into KKD this year. I think they may understand the picture a little better than you sitting in the basement. <<

      Which fund are you talking about, Courage?
      So they have about 3.8 M shares, at a share price of $7.5, that is $28.5 Million. Are you saying they are down more than $40 Million? Oh yes, I think they understand the picture a little better than the average investor that is sitting in the basement.

    • Exactly....if they are not ahead of the curve, I'd be astonished!

    • true; but you dont have to say anything about how you want to put more money in; serious distressed buyout shops keep everything very very quiet so they can get the best price

    • $70 million? Are you sure? For a little under 4 million shares? That is around $17 a share!

    • The fund has invested 70 million dollars into KKD this year. I think they may understand the picture a little better than you sitting in the basement.

      Think about it quite quickly. This is HUGE news.

    • Yeah, but they're really good donuts.

    • Very interested to see how share price reacts to this info Monday...

      1) Any capital raise will be dilutive

      2) Most of their stock is already underwater...are they throwing good money after bad??

      3) Doesn't eliminate contingent liabilities from the picture.

      4) Doesn't eliminate problems with bank debt.

      Don't really understand why anyone would want to give KKD new equity financing...can only see any new money coming in as secured by real estate assets. Convertible debt is a problem unless banks give-up their standing or get refinanced altogether...

      Anyway...not sure I see the angle...time will tell!!

    • Notice the transactions in the biggest of the Courage Funds:

      a bunch of buys
      .
      .
      .
      02/24/05 43,000 5.10 Sell
      ---------------------------------------------------------------
      02/24/05 43,000 5.22 Sell
      ---------------------------------------------------------------
      03/03/05 86,000 5.98 Buy
      ---------------------------------------------------------------
      03/04/05 193,500 6.93 Buy
      ---------------------------------------------------------------
      03/07/05 189,200 7.18 Buy
      ---------------------------------------------------------------
      03/08/05 86,000 7.61 Buy
      ---------------------------------------------------------------
      03/09/05 129,000 7.59 Buy
      ---------------------------------------------------------------
      03/10/05 86,000 7.21 Buy

      ---

      After a bunch of buys, they even got sucked into the panic after the criminal investigation was announced (2 43,000 share sales, one only 5 cents from the all-time low). Then, they start buying again right about the time that "somebody" started the WB rumor (gosh, I wonder who might have done that). Now, they want to help the company out with a transaction that "might entail a provision
      whereby accounts managed by Courage Capital would acquire
      additional equity securities of Issuer".

      might entail a provision
      whereby accounts managed by Courage Capital would acquire
      additional equity securities of Issuermight entail a provision
      whereby accounts managed by Courage Capital would acquire
      additional equity securities of Issuermight entail a provision
      whereby accounts managed by Courage Capital would acquire
      additional equity securities of Issuer.

      Let's see. Selling at the low, now offerring capital.

      Why the sudden change of heart?

      Finally, if this guy gives straight equity, then he is absolutely nuts as the first several hundred million is spoken for in lease obligations, bank loans, and lawsuit settlements.

    • It appears that these guys are typically passive investors and I don't see them coming up with the kind of capital that would be required to take the banks out and get KKD through the next year (i.e. $150 million minimum, probably more to deal with the franchisee guarantees and closing down bad locations). They were clearly suckered at the beginning because their first large purchases were at the beginning of the year above $10.

      This could be the beginnings of a nice pump and dump. Courage Capital could say they sold because Kooper didn't take their offer seriously enough to let them see the books. But they'd need to dump it quick since they own 5% and would have to file when they sell.

      Any serious financing offer is going to be highly dilutive to KKD shareholders, but it wouldn't surprise me to see another pop upwards in the stock in the short run.

    • So far this tells me nothing. What terms would there be? D-i-l-u-t-i-o-n? A hedge fund looking to create a short squeeze to clean up a mistake? We shall see!

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