RadioShack Not In Debt Default: Trade Panel

(RTTNews) - A panel of credit default swaps dealers ruled on Friday that sellers of derivatives meant to protect against debt default by struggling consumer electronic goods retailer RadioShack Corp (RSH) don't have to pay holders of these contracts.

In an unanimous ruling, the International Swaps and Derivatives Association panel said that a default hasn't occurred at RadioShack, over which a query was raised recently by Salus Capital Partners.

RadioShack received a $250 million cash infusion in 2013 from Salus and Cerberus Capital Management. Salus claimed RadioShack violated terms of the loan in accepting a lifeline from shareholders Standard General LP and Litespeed Management LLC.

RadioShack has been posting successive losses. In September, Radioshack said it may have to file for bankruptcy unless it was sold, restructured, or received a major cash infusion.

The company's total debt was $841.5 million at November 1.

On Thursday, RadioShack reported a wider loss for the third quarter, hurt by a 13 percent decline in comparable store sales as traffic waned, and its mobility business fared poorly.

The company has begun cost cutting measures to boots annual earnings by more than $400 million. Apart from focusing on overcoming the negative cash flow, it is striving to spur growth and profitability via its retail platform, and resuscitate its mobility business.

After rallying to $0.57, RSH is trading at $0.52, up a penny from the previous session, on a volume of 3.7 million shares on the NYSE.