Krispy Kreme Doughnuts Inc.’s principal operating subsidiary Krispy Kreme Doughnut Corporation has closed a new secured credit facility aggregating $60 million, comprised of a $25 million revolving credit facility and a $35 million term loan.
The term loan liquidates in quarterly installments of $583,333 beginning March 31, with a final payment of the remaining term loan balance due at the maturity of the new facility in January 2016.
The new facility may be retired without penalty at any time.
Proceeds of the term loan were used to repay the approximately $35 million outstanding balance under the company's prior credit facility, which has been terminated.
The revolving credit facility is intended to be used to support outstanding letters of credit, which currently total approximately $12.5 million, with the balance available for working capital and other general corporate needs, if any.
The company will record a pretax charge of approximately $1.4 million in the fourth quarter of fiscal 2011, ended Jan. 30.
Additionally, borrowings under the new facility have a 2.25 percent to 3 percent interest rate, compared to 7.5 percent under the prior facility.
Krispy Kreme estimates the aggregate interest expense under the new facility for the year ending Jan. 29, 2012, including letter of credit and other fees, will be approximately $2.3 million, or approximately $3.1 million less than the amount of interest and fees that would have been incurred under the prior credit facility.
Wells Fargo Securities LLC served as sole lead arranger of the new facility, and Wells Fargo Bank, National Association, served as administrative agent.
