Wednesday, December 3, 2014

Analyst And S&P Ratings Comments On RadioShack

“There’s no way to keep all the creditors happy unless Standard General steps in and takes all the debt,” said Michael Pachter, a Los Angeles-based analyst at Wedbush Securities Inc. “Every day that RadioShack loses money, its creditors are more at risk of not being repaid.”
And from S&P:
"[I]f the claims (and therefore acceleration) of the term loan lenders are deemed valid, the default would trigger cross default provisions and accelerated repayment of its asset-based lending (ABL) credit agreement and $325 million of senior unsecured notes. Under such a scenario, we do not expect that RadioShack would be able to fund the accelerated repayment and thereby leaving the company little choice but to seek bankruptcy protection in our view. Furthermore, despite the company's recent efforts to gain additional liquidity, recapitalize, and manage cost, continued poor operating trends leading to cash usage could lead to default in the very near term.

As such, we view an eventual default in the near term as likely (even though the current default notice may not immediately lead to a restructuring), and would not expect a positive rating action unless there was an unforeseen improvement in operating trends."

1 comment:

jHurt said...

did you short the stock? how did you play here?