Monday, October 6, 2014

"RadioShack: That's Not the Loan We're Looking For" $RSH

From B Riley

"Although this frees up some borrowing availability and should help liquidity optics for holiday inventory build, there didn't seem to be any assurances that vendors were supportive. Furthermore, Salus Capital (term loan lender) does not seem to have budged on covenants, which means widespread store closings are still not permitted. Given the magnitude of ongoing losses, the significant potential dilution, and some of the language in the company's release, we think the announced agreement simply pushes a likely bankruptcy filing out until after the holidays. We therefore reiterate our Sell rating and $0 PT."

1 comment:

eah said...

...which means widespread store closings are still not permitted.

What is the logic behind this intransigence? Anyone with any investment experience knows it is very often better to cut losses and go from there. And by closing the worst-performing stores it seems you would be cutting losses more than losing revenue...?

This RSH business is very strange business.