RadioShack Corp. (RSH), the electronics retailer with seven straight quarterly losses, plans to meet lenders on Nov. 5 to discuss $835 million of loans it’s seeking to refinance debt, according to a person with knowledge of the transaction.
The financing consists of a $585 million first-lien loan and a $250 million second-lien piece, said the person, who asked not to be identified because terms aren’t set.
The deal would provide the company with $175 million of additional liquidity as Chief Executive Officer Joe Magnacca leads a turnaround of the business, according to RadioShack’s earnings report on Oct. 22. The financing falls short of what the retailer needs to turn itself around after a “sharp decline” in third-quarter performance, according to debt research firm CreditSights on Oct. 23.
The Fort Worth, Texas-based retailer’s loans consists of a $450 million revolver that was arranged by Bank of America Corp. and Wells Fargo & Co., as well as $75 million of first-lien term loans and a $100 million second-lien loan, according to data compiled by Bloomberg. GE Capital, the lending arm of General Electric Co., is arranging the new loans, the person with knowledge of the refinancing said.
RadioShack’s 6.75 percent senior unsecured bonds due in 2019 traded at 68 cents on the dollar on Oct. 28 to yield 15.6 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes are down 6.6 cents since Oct. 21, the day before the company reported that losses widened in third quarter, the data show.
During the three months through Sept. 30, RadioShack had a $98.4 million loss before interest, taxes, depreciation and amortization costs are deducted, according to data compiled by Bloomberg.
Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t.
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