NEW YORK (The Deal) -- A few months after warning that it needed to raise financing to fund its cash flow needs, Crumbs Bake Shop (CRMB) has obtained a $5 million senior secured credit facility, but the nation's largest cupcake store chain isn't going to open new stores.
It will continue closing underperforming ones and is exploring a strategic relationship with a formerly bankrupt ice cream maker.
The New York-based retailer known for its oversized cupcakes, which has 69 locations in 12 states and the District of Columbia, is getting the credit facility from its nearly 15%-owner, Fischer Enterprises, which bought beaded ice cream maker Dippin' Dots out of bankruptcy in 2012 and now wants to create synergies between the two holdings, Crumbs said on Wednesday.
For Crumbs, milking its relationship with Fischer isn't a bad idea. In the company's latest financial report, filed with the Securities and Exchange Commission on Nov. 14, Crumbs warned that it needed additional capital to fund its cash flow requirements.
Besides having only $1.66 million cash on its balance sheet as of Sept. 30, Crumbs reported a $9.52 million net loss for the first nine months of 2013. It also has a $20.195 million accumulated deficit.
Crumbs disclosed in the report for the third quarter that it had used $6.575 million in cash in the nine months ending Sept. 30 to open new stores. The filing noted that "management does not anticipate opening any new stores in the near future and has begun a process of closing underperforming stores."