NEW YORK – Krispy Kreme Doughnuts Inc. (KKD) on Monday said it received $225 million in debt financing, a lifeline for the struggling doughnut chain operator that was at risk of defaulting on past loans.
Proceeds from the financing were used to pay back about $90 million owed under Krispy Kreme's existing credit facility,
"With more liquidity and no near-term payment deadlines, we look forward to getting back to the business of selling doughnuts and coffee," President and Chief Operating Officer Steve Panagos (search) said in a statement.
Krispy Kreme, based in Winston-Salem, N.C., avoided defaulting on a $150 million credit facility in March after its lenders agreed to give the company more time to file its long-delayed financial statements.
The company has faced speculation this year that it may be forced into bankruptcy if it is unable to cover bad loans made to struggling franchisees.
The $225 million consists of a $75 million first lien senior secured revolving credit facility, a $120 million second lien senior secured term loan and a $30 million second lien prefunded revolving credit and letter of credit facility.
Specific terms of the financing arrangements were not immediately available.
Some options investors backed off from bearish bets on Krispy Kreme last week in anticipation of a deal. The company had said its lenders pushed back until April 11 the date on which it would default on its loans due to its financial reporting woes.
Shares of Krispy Kreme rose to $7.99, up from its $7.48 closing price Friday on the New York Stock Exchange (search).