RadioShack Corp. (RSH) issued a point-by-point response to a claim by its lenders tied to a $250 million term loan, on which Salus Capital Partners LLC is the administration agent, that it has violated covenants on its debt.
The response was detailed in a Securities and Exchange Commission filing on Monday.
When reached, Salus did not provide a comment.
RadioShack is disputing the lender's claim that a default occurred and said it "does not believe that the demand for immediate payment or any other exercise of remedies has any merit."
Part of Salus' contention is that RadioShack entered into a recapitalization and amended asset-based loan credit facility with what the original lending documents considered "prohibited affiliates," including General Retail Holdings and General Retail Funding. Salus said that those two are affiliates because investors in them, such as Standard General, own more than 10% of RadioShack's stock, putting them in the prohibited category.
Both General Retails were part of a new lending facility arranged by Standard General LP. But RadioShack said that, even if "expansive concepts of beneficial ownership" were applied, they would still not be considered as owning more than 10% of RadioShack's voting stock. However, the retailer added, that definition doesn't apply in this situation.
General Retail Holdings does have the right to designate directors if the transactions contemplated by the recapitalization agreement occur in 2015. RadioShack argued that did not give it control over the retailer at the time of the refinancing or as of today.