Neither Sugar-Free Nor Sugar-Coated
For once in a long while, beleaguered Krispy Kreme Doughnuts (KKD) made a decision that didn’t come as a surprise to investors.
The Winston-Salem, N.C.-based donut producer announced that it is postponing its test of a sugar-free donut. A spokesperson says the decision is part of a number of initiatives that the new management team is reviewing.
In addition to postponing its sugar-free product, KKD isn’t sugar-coating its situation.
Scott Livengood, chairman and CEO, was replaced by Stephen Cooper as CEO. Cooper, a turnaround specialist with Kroll Zolfo Cooper (KZC) and interim CEO at Enron, is being paid $760 an hour from Krispy Kreme in his new position. Steven Panagos, a KZC managing director, serves as president and COO. He receives $695 an hour. The two also receive reasonable out-of-pocket reimbursements.
Livengood continues to receive some $46,000 a month — equivalent to his previous salary — as a consultant to the company. Under the six-month renewable agreement, Livengood has a non-compete clause and agrees to consult up to 40 hours a week.
Additionally, Krispy Kreme agreed to pay the firm KZC at least $400,000 a month to turn around the donut producer.
On Feb. 17, 2005, KKD’s shares were trading below the $6 mark, down from around $40 per share for its 52-week high. The company has lost money for the last three quarters and recently reported that it’s laying off 125 corporate employees.
Additionally, to reduce costs, Krispy Kreme recently ended a lease on its corporate jet, a move that will save the company about $3 million.
Nonni’s Buys Old London
Melba, meet Nonni. Nonni’s Food Co., a major producer of biscotti and bagel chips, has acquired Old London Foods, the nation’s leading producer of melba toast.
The acquisition includes Old London’s Bronx, N.Y., facility, where it produces a variety of toasts and snack products, and its breadcrumb operations in Willingboro, N.J., and Knoxville, Tenn. The company’s Old London, Devonsheer and JJ Flats brands joins the Nonni’s and New York Style brand names.
Nonni’s majority owner is West Point Partners, a private equity firm with offices in Chicago and Southfield, Mich.
Awrey Bakeries Files Chapter 11 Protection
Family-owned Awrey Bakeries Inc., producer of croissants, biscuits, cakes and sweet goods for nearly 100 years, filed for Chapter 11 bankruptcy protection.
The Livonia, Mich.-based company blamed its financial struggles on declining sales, higher costs of dairy products, the impact of the low-carb craze on sales, skyrocketing benefit costs and rising fuel prices. In addition, it lost a major customer last year and was unable to make up for the lost sales.