Monday, May 12, 2014

Wedbush: "The RadioShack Ship is Sinking" $RSH

Excerpt from a Wedbush report:

"RadioShack’s operational decisions are now being vetted by creditors. The 'bright spot' of Q4:13's earnings release was that the company intended to close up to 1,100 stores during FY:14, subject to the consent of its lenders. That last clause should send shivers down the spines of equity investors, as they are no longer relevant to management decisionsthe creditors clearly are in control of the ship, and in our view, the ship is sinking. The company is already in negotiations to modify terms of a credit agreement that was put into place less than half a year ago. The current credit agreement allows for RadioShack to close up to 200 stores per year, or 600 over the life of the credit agreement. In our view, the operating situation at the company has deteriorated at an accelerating pace, making more store closures than anticipated required for positive cash flow"

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