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Krispy Kreme Doughnuts, Inc. Message Board

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    • Debtwire, citing three unidentified sources, said that Krispy Kreme would announce the loan within 30 days.

      30 days ?

    • What an idiotic article. Krispy Kreme is saved? The cash crunch is over because they borrowed a bigger pile of money to replace money they couldn't pay back? It says the $225 million replaces the existing credit line, so I presume that means the banks are being taken out of the $90 million they have in this. So that leaves $135 million to deal with closing stores and loan guarantees triggered by franchisees. Sales will continue to deteriorate and they'll have a higher interest rate on more debt; or perhaps it's convertible debt which will dilute the existing shareholders.

      If this is true, I suspect those of you with May 2.5 and 5 puts are screwed. I still think the current equity will still end up near worthless but not in two months. KKD will burn through this money in the next 6-12 months and after getting the books cleaned up it will become apparent that it is a mediocre business at best. The lenders in this deal will end up owning the company.

      If this loan comes through and gives KKD a little bit of breathing room, expect the next wave of publicity to be the franchisees demanding that their royalty rates be cut. KKD's current rates aren't sustainable given lousy store economics.

    • Debtwire, citing three unidentified sources, said that Krispy Kreme would announce the loan within 30 days.


      Why can't they announce it now. Oh yeah its a hedge fund and they don't have to disclose crap.

      • 2 Replies to buggeronthewall
      • Or it is DIP financing and KKD is filing...

        DIP financing makes so much more sense to me for this deal.

      • Ailing company accepts loan offer
        Krispy Kreme is saved, report says
        By Brian Louis
        JOURNAL REPORTER
        Friday, March 25, 2005

        (Journal File Photo)
        The cash crunch at Krispy Kreme Doughnuts Inc. may be over.

        The company warned last month that it needed additional credit by today to keep the business going, prompting speculation by analysts and investors that the company might have to file for bankruptcy because of its financial problems.

        But an international business-information service that focuses on distressed debt said yesterday that Krispy Kreme has chosen investment bank Credit Suisse First Boston and hedge fund Silver Point Capital to provide it with a $225 million loan that would rescue the company.

        Debtwire, citing three unidentified sources, said that Krispy Kreme would announce the loan within 30 days.

        "It's a done deal," said Matthieu Wirz, a specialist with Debtwire in New York. "They don't have to file for bankruptcy."

        The new agreement would replace Krispy Kreme's existing $150 million lending agreement, Debtwire said.

        Krispy Kreme owes $91 million under the agreement to several banks, including BB&T Corp. and Wachovia Corp.

        A spokeswoman for Krispy Kreme declined to comment on the report.

        A representative of Silver Point declined to comment, and a message left with Credit Suisse was not returned.

        In late January, Krispy Kreme's lenders extended the deadline for Krispy Kreme's default on the lending agreement until today.

        Krispy Kreme said it could not borrow under its current credit agreement.

        Debtwire's Wirz said that Silver Point, in addition to investing in stocks and bonds, has also become involved in direct lending to companies.

        Silver Point is based in Connecticut. Debtwire's customers are primarily financial professionals, such as investment bankers and hedge-fund managers. Hedge funds are largely unregulated investment vehicles.

        Investors in hedge funds typically are wealthy individuals and institutions such as university endowments and pension funds.

        The past year has been painful for Krispy Kreme and its shareholders.

        The company's shares have fallen sharply as its profit and sales have dropped. Its accounting is under investigation by the Securities and Exchange Commission and it is the subject of shareholder lawsuits.

        Last month the company said that federal prosecutors in New York opened an investigation into the company.

        The shares bottomed at $5.36 that day - down sharply from their all-time high of $49.37 in August 2003.

        But since then, the shares have rallied for several reasons, including the fact that two investors have taken huge positions in the company's stock, on market talk that investor Warren Buffett might take a stake in the company, and hopes that the company could get a new lending agreement.

        Shares of Krispy Kreme closed 39 cents lower yesterday at $8.76.

        � Brian Louis can be reached at 727-7378 or at blouis@wsjournal.com


        This story can be found at:

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    • Has anyone noticed that this article is no longer avail?

    • I think that this situation speaks volumns about Wachovia's treatment of customers.

      Think of it:

      KKD, a hometown Winston-Salem company turns to a hedge fund for lending help rather than to

      Wachovia, a hometown Winston-Salem bank, who has the existing loan. has had the KKD account sometime during their existance, held KKD in trust after the death of Vernon Rudolph and then sold them off to Beatrice Foods...

      KKD may have finally learned...carry vaseline when dealing with Wachovia.

      • 2 Replies to drwooforyou
      • if indeed Wachovia is out, they surely knew more than Silver Cap and are happy not to involve themselves in the BK process.
        BK now is a sure thing;

      • What are you talking about? Sold "them" off to Beatrice Foods? Who?

        Banks like Wachovia are not in the business of lending depositor funds into distressed situations. They are low risk, cash flow lenders. They made a bad decision in this case (as did BB&T) and their objective, IMO, is to get out with as much of their depositors' cash as they can. Leave it to others - with higher risk appetite - to take them out and let them work out the equity / warrents structure.

        Don't blame Wachovia because KKD management shafted them with misstated financials.

    • the_return_of_poopy_pants the_return_of_poopy_pants Mar 25, 2005 5:39 AM Flag

      Looks like my August puts are toast but I will wait for them to file financials. This is an unverified rumor imo.

    • doodles_in_an_armani_suit doodles_in_an_armani_suit Mar 25, 2005 5:37 AM Flag

      Why thank you, di_vur_se_fi. Had I not gone to bed early last night with a wee bit of a hangover from too much scotch I would have posted that article myself.

      I knew I could rely upon you to keep your flock (gaggle of geese) informed.

      May I remind those of you who engage/engaged in illegal naked shortselling that the SEC plans to start enforcing their newly implemented Reg SHO rules one of these days? It is you, my dear shortsellers, who very well may find yourselves in a jam soon.

      I advise those of you who engage or did engage in naked shortselling to find yourselves a good securities attorney and perhaps even a good criminal defense lawyer today.

    • Two_steps_forward_One_step_back Two_steps_forward_One_step_back Mar 25, 2005 3:17 AM Flag

      This reminds me of the Iraqi media, who despite looking out their window and seeing American tanks in the center of Bagdad, reported that the Americans had been beaten back to the border. Well, we all know what happened to that regime...

    • how about the investigations of the accounting practices by SEC and special committee? And any sign-off by the auditor?

    • i wonder what the terms are. it is still possible that the stock price goes down once the details are in.

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