According to a person with knowledge of the matter, cash-strapped electronics chain RadioShack Corp. managed to reach an agreement with a consortium led by Standard General LP to refinance loans estimated to about $590 million to re-stock ahead of the holiday season.
In September 2014, RadioShack warned it may be forced to file for bankruptcy protection, in case its cash state worsens. Still, the U.S.-based company explained that it is looking for other options, including a sale or investment, and that liquidation is the last resort. Earlier in 2014, RadioShack creditors barred its plans to close more than 1 000 stores, forcing the company to reduce its store network by only 200.
Hedge fund Standard General, which recently raised its stake in RadioShack to 9.8% to become its biggest shareholder, will form a consortium of lenders to refinance debt outstanding under a $535 million credit line from the lending unit of General Electric Co, GE Capital. According to the person familiar with the situation, refinancing of some additional debt is also included in the agreement.
Last week, Standard General announced it was in advanced talks to improve the companys cash position in order to re-stock in the eve of the upcoming holiday season and to improve the electronics retailers flexibility, lifting the restrictions under its current debt agreement of how much money it can draw from the asset-backed revolving credit line.
RadioShack Corp. rose by 1.59% on Thursday in New York to close at $0.99 per share, marking a one-year change of -70.80% and giving it a market value of $99.68 million. According to CNN Money, the 2 analysts offering 12-month price forecasts for RadioShack Corp. have a median target of $0.75, with a high estimate of $1.00 and a low estimate of $0.50. The median estimate represents a -24.24% decrease from the last price of $0.99.
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