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Krispy Kreme Doughnuts, Inc. Message Board

  • fisk007 fisk007 Jan 15, 2013 10:03 AM Flag

    Thursday

    Will Conference provide any news?

    Is this Tax Asset Protection Plan a negotiating tool?

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    • A key line in the filing:

      "The Board of Directors shall only grant an exemption in response to an Exemption Request if it receives a report from the Company's advisors to the effect that the acquisition of Beneficial Ownership of Common Stock by the Requesting Person does not create a significant risk of material adverse tax consequences to the Company or the Board of Directors otherwise determines in its sole discretion that the exemption is in the best interests of the Company. Any exemption granted may be granted in whole or in part, and may be subject to limitations or conditions the Board of Directors shall determine necessary or desirable to provide for the protection of the Company's NOLs. The Exemption Request shall be considered and evaluated by the independent Directors, as defined in the Plan, and the action of a majority of such Independent Directors shall be deemed to be the determination of the Board of Directors for purposes of such Exemption Request."

      The way it seems to read is this...

      IF somebody wants to take control of KKD at a price that the Board deems to be to low - or in a manner that is not TAX beneficial to the current share holders.... then this Tax Asset Protection Plan COULD BE initiated to thwart an insufficient or ill structured bid for the company.

      The BOD looks like it has total discretion in determining if this plan kicks in.

      The tax losses are an asset that needs to be taken into consideration in any offer to buy the company.

      Believe this tax situation was created in order to eliminate operating companies from taking over companies with huge Tax Losses on the books strictly to use those tax losses against their income. they would close the operations of the company acquired shortly after acquiring.

      Believe new rules require the acquired company to stay in current operational form for a minimum of two years after acquisition in order to retain some of the tax loss benefits but I could be wrong

      • 1 Reply to fisk007
      • Again...

        It seems as though this is a protection plan against a "hostile" takeover as stated in the AP article:

        "Krispy Kreme's so-called "poison pill" plan limits the way the company's previous operating losses and other credits could be applied to future taxes if there were a change of ownership."

        And the next line SHOULD read... "IF THE BOD determines the need for the "poison pill" to be put into action".

        ie - IF...IF they were to receive an offer to buy the company then they have a provision in place that would TRUMP a LOW BALL offer if it were determined by the BOD to be insufficient. This reduces the risk that an acquirer would gain control of the company at a low ball price.

        Smart move in light of the growth demonstrated over the last 3 years and the potential for the future.

        If they were to get takeover offers - they want to make sure they are in a position of strength to maximize share holder value in any possible deal.

    • From the company presentation on the website:

      Stage is set for accelerated domestic
      growth and increased profitability

      The true story of Krispy
      Kreme is not what has been
      accomplished and “where we
      are” …. it is the multiple
      opportunities to grow that
      have yet to be exploited and,
      through them, “where we are
      going.” It is “quite simply” a
      story of long term growth
      potential.

      • 1 Reply to fisk007
      • Stage is set for accelerated domestic
        growth and increased profitability

        The true story of Krispy
        Kreme is not what has been
        accomplished and “where we
        are” …. it is the multiple
        opportunities to grow that
        have yet to be exploited and,
        through them, “where we are
        going.” It is “quite simply” a
        story of long term growth
        potential.

        - - - - - -

        Don't know what other people think...

        But that summary above sounds exactly like something a Big Player / Private Equity Group would desire to grab. BRAND. BRAND. BRAND.

        Still think the "poison pill" Tax Asset Protection Plan is there just to protect them from low ball offers.

        You can bet if the RIGHT offer came along with the RIGHT premium - they would accept it.

        Would guess $16 to $17 is the absolute LOWEST possible acquisition price with maybe $20'ish being a high guesstime for the near term (next 6 months).

 
KKD
15.55+0.22(+1.44%)Jul 22 4:03 PMEDT

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