RadioShack seeks rescue financing

RadioShack (NYSE:RSH) is in talks with shareholder Standard General to secure a rescue financing package. The retailer is hoping to avoid bankruptcy.

Standard General would bolster RadioShack's cash by issuing debt or equity, a source close to the matter told Bloomberg. The firm is also assisting in developing a plan intended to help the retailer avoid filing for Chapter 11 bankruptcy. In addition, Standard General is seeking to refinance RadioShack's $250 million second-lien term loan, which is held by Salus Capital Partners and Cerberus Capital Management.

In the last quarter, RadioShack reported a loss of $98.3 million, same-store sales fell 14 percent, and RadioShack creditors blocked the closing of 1,100 stores earlier this year, limiting potential closings to as many as 200 instead.

Standard General owned more than 7 percent of RadioShack as of June 30, and now the share is up to 10 percent.

RadioShack would not be the first retailer resuscitated by Standard General. Last month the investor put together a package for American Apparel with as much as $25 million to help the flailing chain. Of that money, $10 million was used to buy out Lion Capital's loan. As a result of the partnership with ousted CEO Dov Charney, Standard General was allowed to name three seats on the board, plus two seats agreed upon by both the firm and the company—one which went to RadioShack's CEO Joseph Magnacca.

To avert continuing losses, RadioShack has been trying to reinvent itself as a more modern retailer. A few months ago, the retailer introduced RadioShack Labs, a program to support inventors and startups aimed at creating new technology. The company has also undergone extensive store remodeling and begun rolling out new concept stores.

For more:
-See this Bloomberg article

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