Wednesday, June 4, 2014

Radio Shack CEO Won't Comment on Bankruptcy Possibility

Reported yesterday:

“It definitely changes the pace [of the turnaround] when you have to go over three years instead of more aggressively closing stores in one year,” Magnacca told reporters. He said some stores will move into a “harvest” strategy, meaning they will be targeted for other cost reductions.

Magnacca said he is in almost daily conversations with the lenders, who wanted to take a “premium” from the store-closing savings, which the company found unacceptable. [...]

He declined to say whether the development has led RadioShack to consider a Chapter 11 bankruptcy filing. “I can’t comment on that, obviously,” the CEO said.
"Harvest strategy" = runoff?


Anonymous said...

Jan 2015 $0.5 puts at 15 cents (at the bid). Under the runoff scenario, would you "underwrite" the equity for 8 months? That would be 43% return with a 64% deductible from current price...

It seems weird that $1.4 stock and such expensive puts can co-exist at the same time. Which one is wrong?

CP said...

Don't forget about the bond price - 26% yield.

Both the bonds AND the stock seem expensive; the stock obviously more so.