Thursday, December 11, 2014

Contingencies Regarding RadioShack's Recapitalization and Investment Agreement $RSH

"GRH’s obligation to complete the Sponsor Conversion is subject to (1) the entry into an amendment to, or a replacement contract for, our current contract with a third party supplier (which expires by its terms on December 31, 2014) on terms that are equivalent or more favorable, taken as a whole, to us than the terms of the existing contract, (2) us having at least $100 million of available cash and borrowing capacity at January 15, 2015, and (3) our management developing, reasonably and in good faith, an operating plan and budget for fiscal year 2016 that is accepted by our board of directors and contemplates earnings (excluding specified cash and non-cash charges) before interest, taxes, depreciation and amortization of at least $75.4 million, as well as other customary closing conditions. There is no assurance that these closing conditions will be met.

For example, we have not amended, or replaced, our current contract with a third-party supplier (which expires by its terms on December 31, 2014) on terms that are equivalent or more favorable, taken as a whole, to us than the terms of the existing contract. Additionally, if our results do not improve, we will not have at least $100 million of available cash and borrowing capacity at January 15, 2015. We also may not be able to develop, reasonably and in good faith, an operating plan and budget for fiscal year 2016 that would be accepted by our board of directors and contemplates earnings (excluding specified cash and non-cash charges) before interest, taxes, depreciation and amortization of at least $75.4 million. Further, it is a condition that no default or event of default shall have occurred and be continuing under our 2018 Credit Agreement, the SCP Credit Agreement or our 2019 Notes."

1 comment:

Anonymous said...

All of the conditions above seem to be insurmountable hurdles for RSH to meet prior to their respective deadlines.

RSH has to come up with $250 million to make immediate payments to Salus and Cerberus or file for bankruptcy protection.

It is without doubt that a default has occurred under Section 7.1(c) of the Credit Agreement dated on December 10, 2013, given that the the Borrower issued “Stock Equivalents” to Affiliates in connection with the October 3rd transaction, as is expressly defined and prohibited in section 5.6 thereof.