Well there go my puts. I think I will be able to salvage some of the premium when the financials are finally filed.
Friday, March 25, 2005
Ailing company accepts loan offer
Krispy Kreme is saved, report says
By Brian Louis
JOURNAL REPORTER
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.
journalnow.com
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