RadioShack Enters Into Refinancing Agreement With Standard General : Report

(RTTNews) - RadioShack Corp. (RSH) entered into an agreement with a consortium led by Standard General LP to refinance about $590 million of loans to re-stock ahead of the holidays, Bloomberg reported citing a person familiar with the matter.

The report indicated that the New York-based hedge fund Standard General will lead a group of lenders to refinance debt outstanding under a $535 million asset-backed revolving credit line from GE Capital, the lending arm of General Electric Co. (GE). The pact also includes refinancing of some additional debt.

Last month, Standard General said in a filing it's working to improve RadioShack's liquidity ahead of the holiday season. The fund, RadioShack's largest investor, reached an agreement lasting until June 2015 that prevents it from taking over the board or proposing an acquisition or restructuring without RadioShack's consent.

The refinancing gives RadioShack access to more cash and greater flexibility, since the current debt agreement restricts how much money it can draw from the revolver, according to a December 13 filing with the U.S. Securities and Exchange Commission. It may provide the retailer enough leeway to close a larger number of underperforming stores, helping the company burn less cash.

RadioShack, the Fort Worth, Texas-based electronics retail chain, has been trying hard to avoid a bankruptcy filing after running out of cash supply. The company is striving to strengthen its balance sheet, cash supply and re-invent itself to avoid filing for bankruptcy.