RadioShack Corp. (RSH) may have gotten itself another chance to stave off bankruptcy.
Bloomberg reported late Thursday that the loss-making electronics chain had struck a deal with a consortium of lenders led by New York-based hedge fund Standard General to refinance around $590 million of loans. It cited a person familiar with the matter.
There was no immediate statement from the company, which had warned two weeks ago that it could face bankruptcy without a deal. Chief financial officer John Feray resigned immediately after that announcement after less than a year in the job.
The refinancing is in the shape of a new $535 million asset-backed revolving credit line from GE Capital, the finance arm of General Electric Co (GE), Bloomberg said. The facility gives RadioShack access to more cash to re-stock ahead of the crucial holiday period, and may also give it more flexibility to close its poorest-performing stores to staunch its losses.
RadioShack creditors blocked a plan earlier this year to shutter 1,100 stores, limiting closures to 200.
RadioShack, which sells mobile phones and other consumer electronic goods, has had a wretched couple of years, losing market share to retailers such as Amazon.com (AMZN) and Best Buy (BBY). Its net loss in the first half of this fiscal year widened to $235 million from $80 million a year earlier.
The company’s shares have picked up the last month on hopes of a successful refinancing and a turnaround in its operations’ fortunes, but are still down by over 95% from their post-crisis peak in 2010, implying a strong risk of bankruptcy.
Standard General, which once put together a similar rescue plan for American Apparel Inc. (APP) is already RadioShack’s largest investor. It is currently bound by an agreement lasting until June 2015 that prevents it from taking over the board or proposing an acquisition or restructuring without RadioShack’s consent.