WINSTON-SALEM, N.C. – Krispy Kreme Doughnuts Inc. (KKD) agreed Monday to the terms of a "success fee" for the turnaround specialists brought in to return the snack maker to profitability.
Consultant Kroll Zolfo Cooper LLC (search) will get a warrant for 1.2 million shares at $7.75 a share apiece for its work, Winston-Salem-based Krispy Kreme said in a prepared statement.
Shares of Krispy Kreme rose 22 cents, or 3 percent, to $7.43 on the New York Stock Exchange.
The warrant, which allows KZC to purchase the shares, can be exercised on either Jan. 29, 2006, or 30 days after the naming of a chief executive to succeed Stephen Cooper, whichever is later, the company said.
"Negotiating for an equity-based success fee reflects our strong confidence in the long-term prospects of Krispy Kreme," Cooper said in a statement released by Krispy Kreme. "While the company still faces a number of challenges, we believe that Krispy Kreme has a bright future."
The deadline for negotiating the "success fee" had been extended three times by Krispy Kreme, starting in March.
In January, Krispy Kreme forced out Chief Executive Scott Livengood (search), turning to Cooper and Steven Paganos to try to overcome sinking profits and investigations by the Securities and Exchange Commission (search) and the U.S. Attorney's Office for the Southern District of New York.
Cooper previously led the turnaround at Boston Chicken (search), which declared bankruptcy in 1998. That was just five years after the restaurant chain went public with fanfare similar to the hoopla that surrounded Krispy Kreme's initial public offering in 2000.