RadioShack's Last Best Hope May Be Another Refinancing

NEW YORK (The Deal) -- For RadioShack (RSH), much-needed financing from the likes of hedge fund Blue Crest Capital Management could be the electronics retailer's last best hope for buying time to effect a turnaround.

BlueCrest has offered to back a buyout of secured lenders that are resisting the company's plans to shutter up to 1,100 stores, according to a Bloomberg News report. Under existing credit agreements, senior lenders must approve store closures that exceed 200 in number.

Salus Capital Partners acts as administrative agent on the company's $250 million second-lien term loan, according to Bloomberg data.

RadioShack, BlueCrest and Salus all declined to comment on the situation, as did the retailer's financial adviser Peter J. Solomon Co.

But even if BlueCrest were to succeed in aiding the Fort Worth-based relic from the 1980s, a refinancing would only buy the company a short time as it pursues a turnaround.

"It is important to note that RadioShack just obtained a refinancing package in the fourth quarter of 2013 which added about $200 million in incremental liquidity, and here we are again already at this point," said Manoj Chadha, an analyst with Moody's Investors Service Inc., referring to the second-lien term loan.

Instead of giving RadioShack more breathing room for its turnaround, the situation has deteriorated rapidly and the markets are showing little confidence in the company's survival.

Short-term protection against a credit default by RadioShack has risen dramatically in price over the past month, suggesting a day of reckoning -- and a possible payday for holders of its credit-default swaps -- could possibly come within the next few months.

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