Thursday, May 8, 2014

Radio Shack Lenders Block Store Closure Plan $RSH

Just made this announcement,

"RadioShack Corporation previously announced that it was seeking consent from its lenders under the 2018 Credit Agreement and 2018 Term Loan to pursue a program to close up to 1,100 stores.
    The terms on which the lenders are currently willing to provide this consent are not acceptable to the Company.
While the Company may continue to have discussions with its lenders regarding the proposed store closure program, the Company is continuing with a plan to close fewer stores and pursuing other cost reduction measures permitted under the existing terms of the 2018 Credit Agreement and 2018 Term Loan."
What happened here?? Did the lenders say that they wanted an amortization payment in exchange for the consent - even though the consent arguably helps them by reducing the burn rate - just because they thought they had all the negotiating leverage?

Or, did the lenders decide that store closures are just a patch that won't help the recovery on their loan?

And are they now thinking in terms of recovery, meaning they think that the fulcrum is the senior security / their principal is in danger?

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