That's surprising considering this, and I know the krispy kreme in long island went out of business, and they used to always be packed.
LOS ANGELES — Shares of Krispy Kreme Doughnuts Inc. (KKD) slid 16 percent to an all-time low on Thursday as investors fretted that the once high-flying doughnut chain may be headed for bankruptcy, analysts said.
Krispy Kreme, hard-hit by sluggish doughnut sales and a Securities and Exchange Commission (search) accounting probe, warned this week of a possible cash crunch if it is not able to secure additional funding by the end of March.
"One of the ultimate threats is to force the company into bankruptcy," said Morningstar Inc. analyst Carl Sibilski. "It's definitely on the table."
A Krispy Kreme spokeswoman declined to comment. The company this week said it was slashing 25 percent of its staff outside retail outlets. It also sold its corporate jet to cut costs.
The company's stock, once a Wall Street darling, has lost over 80 percent of its value in the last year.
Last month, Krispy Kreme averted defaulting on a $150 million credit facility after its lenders agreed to give it until March 25 to prepare its financial statements. But by that time, Krispy Kreme said, it will need additional credit to fund its operations.
One of the problems facing investors, Sibilski said, is that it is unclear how much money Krispy Kreme may have to put up to cover bad loans to franchisees.
"We know exactly how much they are on the hook for officially, but through back door agreements we don't know," Sibilski said.
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