Winston-Salem / NC. (kkd) Krispy Kreme Doughnuts Inc., member of the Lotte Group, announced that its Board of Directors has adopted a Shareholder Protection Rights Agreement to replace the Company´s existing Rights Plan, which has expired on January 18, 2010.
«The new Rights Plan was adopted to deter abusive takeover tactics, but it was not adopted in response to any specific effort to acquire control of the Company. The Company´s current market capitalization makes the Company and its shareholders especially vulnerable to a creeping acquisition of control whereby a person can acquire a substantial percentage of the Company´s outstanding stock prior to making any public disclosure regarding its control intent and without paying a control premium. Krispy Kreme believes the new Rights Plan, like the existing Rights Plan, will provide the Board of Directors with negotiating leverage if a third party offers to acquire the Company at a price that would not provide shareholders with the full value of their investment. The issuance of the rights has no dilutive effect, will not affect reported earnings per share and is not taxable to Krispy Kreme or its shareholders», said Jim Morgan, Chairman of the Board of Directors and CEO of the Company.
In connection with the adoption of the new Rights Plan, the Company´s Board of Directors declared a dividend of one right on each outstanding share of the Company´s common stock. The dividend will be paid on January 19, 2010 to shareholders of record on January 18, 2010. The rights will trade with, and be represented by, the existing common stock and no further action by shareholders is necessary unless and until a triggering event occurs and the rights become exercisable. Should the rights become exercisable, the Company will notify shareholders.
The mechanics of the new Rights Plan are similar to the existing Rights Plan. In general terms, and as in the existing Rights Plan, the rights that will be issued under the new Rights Plan are not exercisable until such time as a person or group becomes the beneficial owner of 15 percent or more of the Company´s common stock immediately following the expiration of the existing Rights Plan. The rights may cause substantial dilution to a person or group that acquires 15 percent or more of the Company´s common stock unless the rights are first redeemed by the Board of Directors. Unlike the existing Rights Plan (which had a ten-year term), the new Rights Plan only has a three-year term.
