RadioShack Corp. has tried--unsuccessfully so far--to convince a
major supplier to alter its terms as the struggling electronics
retailer works to avoid a bankruptcy filing.
The company, which disclosed the effort in a securities filing
Monday, didn't name the vendor or spell out the issues under
discussion. But it has been in talks with wireless carriers
including AT&T Inc. and Sprint Corp. to ease the terms under
which they provide equipment that RadioShack resells, people
familiar with the matter said.
The talks with the supplier haven't borne fruit but are
continuing, the company said in the filing. RadioShack warned
earlier this month that it was quickly running low on cash and
could be forced to seek bankruptcy protection soon if it can't find
a refinancing option.
The company has been considering a $585 million financing
package from hedge find Standard General LP and investment bank UBS
AG. Those talks were continuing Monday and will likely come to a
head this week or not at all, people close to the discussions
said.
Meanwhile, RadioShack said it is still exploring other
restructuring scenarios with its lenders, bondholders, shareholders
and store landlords.
Talks with vendors could be crucial. The chain has been forced
to put up letters of credit to secure products to sell in its more
than 4,400 stores. Mobile devices and accessories drive more than
half of RadioShack's sales. Easing the terms of those device
deliveries would give the retailer more money to work with as it
gears up for the holiday shopping season..
RadioShack has struggled with years of losses as demand for many
of its products dwindles and rivals lure away its customers. The
company last year hired Chief Executive Joe Magnacca to reverse the
chain's decline with a more aggressive store overhaul, but the
effort has so far failed to pull the brand out of its tailspin.
A steep drop in sales over the early summer left the company
with $30.5 million in cash on Aug. 2--about $6,800 per store. The
chain also said it has $152 million available under a line of
credit at that time. it.
Thomas Gryta and Ryan Knutson contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and
Gillian Tan at gillian.tan@wsj.com
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