Krispy Kreme May Ask Lenders for Extension

The doughnut maker says it's unlikely work on its financials will be done by Dec. 15.
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Krispy Kreme

(KKD)

said that while it's making substantial progress toward completing the financial statements required by its lenders, the doughnut seller is discussing the possibility of seeking more time, saying it's highly unlikely the work will be finished by mid-December.

The Winston-Salem, N.C., breakfast-sweets maker is obligated by its credit agreements to deliver certain financials to its lenders by Dec. 15, including those for fiscal 2005 and the restated results for previous periods. The company signed credit pacts worth $225 million in April.

Krispy Kreme said in filings with the

Securities and Exchange Commission

that based on preliminary talks with its lead lenders, it believes it can get an extension, although one hasn't been granted yet.

The company made the comments following two published interviews with Chief Executive Stephen Cooper. Both articles were addressed in the SEC filings and regarded the firm's operations.

Cooper, who ran

Enron's

turnaround effort and took the helm at Krispy Kreme in January, told

Business Week

in a Nov. 18 interview that he was confident lenders would give him time to fix the company's problems, even if its auditors can't make enough progress on past earnings reports by next month's deadline.

"I'm hopeful we're going to meet

the deadline," Cooper said in the interview, adding that "if it seems that date is in question we'll go back to our lenders to deal with it."

Additionally, he told

Business Week

he doesn't see "any compelling reason why this company would be a bankruptcy candidate."

Meanwhile, the

Winston-Salem Journal

also said Cooper was hoping the filing timetable would be met, but if not that an arrangement could be reached with the creditors.

Krispy Kreme has faced government scrutiny for more than a year and shareholder lawsuits over past management's accounting practices. The stock's highflying days seem long ago now, as investor confidence has proven difficult to regain after a bookkeeping scandal led to the departure of former CEO Scott Livengood and a broad restatement.

A report prepared earlier this year by two independent directors recommended a number of corporate governance reforms at the company.

Shares of Krispy Kreme closed Friday at $5.57, down 1 cent.