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Krispy Kreme closes $160M credit facility, settles class action settlement

WINSTON-SALEM N.C. Krispy Kreme Doughnuts Inc. said late Friday it closed a new $160 million senior secured credit facility and that it gained approval on the proposed settlement to the securities class action lawsuit filed against the company in May 2004.

In a final judgment from the U.S. district court for the middle district of North Carolina, Krispy Kreme will give the plaintiff class 1.8 million shares of its common stock and warrants to buy 4.3 million shares at $12.21 per share. The full settlement, including a cash payment, was valued at about $75 million. Krispy Kreme expects to record a $16 million charge to fiscal 2007 fourth-quarter earnings as a result, the company said.

Under the settlement, all claims have been dropped against the company and its management, expect for those that may be brought against former chairman and chief executive Scott A. Livengood. Original claims alleged that Krispy Kreme failed to disclose the company’s true performance during its downturn starting in early 2004, misled investors and artificially inflated the company’s stock price.

Krispy Kreme’s new $160 credit facility will be used to repay about $107 million in debt under its former credit provision, the company reported. The new facility includes $50 million in revolving credit and a $110 million term loan. Krispy Kreme, which operates or franchises about 395 namesake doughnut-and-coffee restaurants, will record a $9.6 million charge for prepayment fees in the quarter ending April 29, or the first quarter of fiscal 2008. The facilities were arranged by Credit Suisse.

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