WINSTON-SALEM N.C. Krispy Kreme Doughnuts Inc. said Wednesday that it has secured with its lenders more relaxed credit facility covenants, but that interest rates would rise on both its $76.1 million term loan and $20.3 million outstanding letters of credit.
The amendments were not outlined, but Krispy Kreme said the interest rate on its term loan will increase 2 percentage points to LIBOR plus 5.50 percent. LIBOR is the London interbank offer rate, or the rate at which banks borrow funds from each other. It is typically used as a benchmark for short-term lending rates. Fees on the company’s letters of credit also rose 2 percentage points to 5.75 percent, the company reported.
Krispy Kreme, which operates or franchises 449 namesake locations, said last week it would seek amendments to its credit arrangements because they were scheduled to become “more stringent” during the company's fiscal 2009, which is in progress. The company also has reported declining sales and profit for the past three years. As of Feb. 3, which marked the end of the company’s fiscal 2008, Krispy Kreme was in compliance with all financial covenants, it said.
The company expects to file its annual report on April 17.
