Toronto, Nov. 20 - Shares of CoolBrands International Inc. soared 62 percent Monday after the frozen dessert maker appointed a new chief executive and reconstituted its board of directors in a move aimed at giving it time to recover from financial problems.
The shares were up 42 Canadian cents at C$1.10 at midday on the Toronto Stock Exchange, where it was the volume leader at 4.8 million.
The maker of Eskimo Pie and Godiva ice cream said after the bell Friday that co-Chairman and Chief Executive David Stein had resigned as CEO and from the board in order to facilitate a deal with a group that agreed to buy $21.7 million in debt of its bankrupt joint venture Americana Foods. That debt is guaranteed by CoolBrands.
The group, controlled by co-Chairman Michael Serruya -- who is CoolBrands co-founder and a major shareholder -- agreed to grant the company a forbearance on the debt.
In exchange for the group not enforcing the debt, CoolBrands replaced its four independent directors and Stein with three new independent directors. It also appointed Serruya as interim chief executive and issued Serruya's group warrants representing about 9.8 percent of CoolBrands' shares.
Stein will remain with CoolBrands as head of strategic planning.
Loss-making CoolBrands, hit by slowing demand for its frozen desserts and the loss of a lucrative licensing deal with Weight Watchers International Inc., said that it expects the actions will give it sufficient time to restructure from what it called "serious financial difficulty."
The company said its total debt is about $25 million, including Americana's debt.
CoolBrands also said on Friday it was selling its dairy unit to Healthy Foods Holdings for $45 million in cash, plus a $5 million subordinated note and a warrant to purchase up to 2 million shares. Earlier this year, the company sold its Value America flavors and ingredients division to an unnamed buyer for $10 million to repay debt.