RadioShack Seeking Additional Capital After Losses

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RadioShack Seeking Additional Capital after Losses

RadioShack Corp announced it is seeking new capital and restructuring debt as the debt of the electronics retailer grows and its turn around attempts continue to fail.

Shares rose slightly after the announcement but the company posted results that did not meet the expectations of analysts with sales falling 20%.

Market Watch quotes Joseph C. Magnacca, CEO, as having said, “While we are advancing on many fronts, we may need additional capital in order to complete our work. As a result, we are actively exploring options for overhauling our balance sheet and are in advanced discussions with a number of parties.”

Magnacca said the options might include restructuring of debts, significant cuts to cost and consolidation of the store base. However, he warned that the details of the capital plan are not final, and that they might need consent from lenders.

The CEO did not mention any possibility of seeking protection for bankruptcy, which investors have been thinking about for a while. On Wednesday, an analyst from Wedbush Securities issued a warning, saying the company was headed towards bankruptcy.

CNN reported that the poor performance is due to mobile devices’ weak demand and lack of customers. The losses were $137.4 million, doubling from last year’s.

The company has been burning through its funds, ending the quarter with $30.5 million only on the balance sheet. This is down from the $179.8 million it had at the beginning of the year. It has a debt of $658 million, maturing in 2018 and 2019, up from the $614.5 million it had at the close of the last period.

If RadioShack finds capital, it might be from Standard General, the hedge fund that holds the largest stake, about 10%, in the company. The company had announced in March that it would close 1,100 stores but instead closed 200 stores after lenders denied consent.

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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com

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With an upbringing rooted in deep ethical values, Yashu Gola knows how to put honesty and dedication into his articles. This young and dynamic financial analyst has done his graduation in IT engineering. His interests in financial writing have once brought him to our digital doorsteps. Since then, he has been an integral part of ForexMinute.com and writes the most captivating news-articles on the foreign exchange industry, cryptocurrencies, and medical marijuana trading.