Monday, June 16, 2014

"S&P Downgrades RadioShack To 'CCC', Outlook Negative" $RSH

Standard & Poor's Ratings Services today lowered its corporate credit rating on the Fort Worth, Texas-based RadioShack Corp. to 'CCC' from 'CCC+'. The rating outlook is negative. At the same time, we lowered the rating on the company's senior unsecured notes to 'CC' from 'CCC-', two notches below the corporate credit rating. The notes' recovery rating remains a '6', which indicates our expectation of negligible (0%-10%) recovery of principal in the event of payment default.

"The downgrade reflects the company's very weak operating trends, which have led to significant liquidity usage. Even if performance trends moderate, we expect the company to be using cash over the near term," said credit analyst Charles Pinson-Rose. "We currently expect that the company has liquidity sources to finance the operating losses and working capital needs in the current fiscal year (ending January 2015), but the company would have very small amounts of liquidity early next year, which could lead to a liquidity crisis and default or the company's decision to seek a financial restructuring."

1 comment:

Anonymous said...

It seems like institutional investors are beginning to unload RSH shares, which have fallen below $1 today.