Dive Brief:
-
Swiss investment firm Salus Capital Partners has offered struggling electronics retailer RadioShack Corp. $500 million in bankruptcy financing, sources told the Wall Street Journal.
-
While there has been no declaration of bankruptcy, the retailer has warned that could be necessary as it continues to struggle and runs out of cash. The retailer has been blocked by some of its creditors, including Salus, from closing stores in order to turn things around.
-
The loan, unsolicited by RadioShack, is a debtor-in-possession loan, which is used during bankruptcy and provides the lender with a significant influence in those operations. It would replace $585 million in financing. The offer expires Thursday.
Dive Insight:
RadioShack has seen falling sales for 11 quarters running, its stock price is in shambles, and its holidays weren’t too great either. That makes a Chapter 11 bankruptcy filing, a possibility for a while now, all the more likely. If the retailer takes Salus up on its offer—which it may have to—it will be under the sway of a firm that has not always seen eye to eye with the retailer’s executive suite. Consider that Salus recently accused RadioShack of defaulting on a loan, an accusation deemed untrue by the International Swaps and Derivatives Association.