The biggest name in household electronics, RadioShack Corporation (NYSE:RSH), is fighting real hard to maintain its existence, especially after nine straight quarters of loss and shrinking credit limit. In its efforts to stay on the ground, RadioShack Corporation (NYSE:RSH) is trying to change the nature of its commercial relationship with one of the main suppliers, which can be helpful during financial restructuring.
In one of the recent regulatory filings of RadioShack Corporation (NYSE:RSH), the company mentioned about this change and the fact that majority of its creditors are involved in the process. The step seems way too desperate, especially after the resignation of Chief Financial Officer of RadioShack, John Feray, who has joined other executives leaving the ailing company.
According to a Credit Suisse banker and former bankruptcy attorney, David Tawil, these plans revolve around the extension of payment terms, although he concluded that the step indicates the urgency of the situation. Tawil added,
“These types of critical vendor talks also prefaced the bankruptcies of Circuit City and Borders, and we know well where those both ended up.”
Tawil is not the only one with this opinion as analysts at Griffin Securities said,
“We are of the belief even should the company receive financing it will merely be a band aid with the dissolution of the company being the ultimate outcome.”
Griffin Securities responded after being asked about the latest financial aid of $585 million for RadioShack Corporation (NYSE:RSH) from UBS AG (VTX:UBSN) and Standard General LP.
The loan will offer some credit flexibility to the company and RadioShack is likely to use it to settle loan worth $535 million from GE Capital, capital unit of General Electric Company (NYSE:GE). RadioShack Corporation (NYSE:RSH) has lost up to 40% of its share value since the beginning of the year.
This article has been written by Prakash Pandey and edited by Serkan Unal.