RadioShack Said to Reach $590 Million Refinancing Agreement

By Beth Jinks

RadioShack Corp. (RSH), the electronics chain trying to stave off bankruptcy, reached an agreement with a consortium led by Standard General LP to refinance about $590 million of loans to re-stock ahead of the holidays, a person familiar with the matter said.
Standard General, a New York-based hedge fund, will lead a group of lenders to refinance debt outstanding under a $535 million asset-backed revolving credit line from GE Capital, the lending arm of General Electric Co. (GE), said the person, who asked not to be identified because the negotiations are private. The pact also includes refinancing of some additional debt, the person said.
Last month, Standard General said in a filing it’s working to improve RadioShack’s liquidity ahead of the holiday season. The fund, RadioShack’s largest investor, entered into
an agreement lasting until June 2015 that prevents it from taking over the board or proposing an acquisition or restructuring without RadioShack’s consent.
The refinancing gives Fort Worth, Texas-based RadioShack access to more cash and greater flexibility, since the current debt agreement restricts how much money it can draw from the revolver, according to a Dec. 13 filing with the U.S. Securities and Exchange Commission. It may provide the retailer enough leeway to close a larger number of underperforming stores, helping the company burn less cash.

Photographer: Daniel Acker/Bloomberg

A customer pays for merchandise at a RadioShack Corp. store in Peoria, Illinois, U.S.... Read More

‘Five Pillars’

RadioShack creditors blocked a plan earlier this year to shut 1,100 stores, forcing the retailer to limit the closings to as many as 200. Officials at RadioShack and Standard General didn’t immediately respond to messages seeking comment outside normal business hours.
Standard General emerged as a potential savior for the retailer in August, when Bloomberg News reported that the hedge fund was in financing talks. The firm previously orchestrated a lifeline for American Apparel Inc. (APP), another troubled retailer.
RadioShack Chief Executive Officer Joe Magnacca has been remodeling stores and revamping its product lineup in a bid to revive sales. The former Walgreen Co. executive who took over last year brought in a new leadership team and has outlined what he calls the “five pillars” of a turnaround, including boosting efficiency and repositioning its brand.