RadioShack Corp. share price up, negotiates with creditors and third parties for fresh financing

RadioShack Corp. revealed that it is in talks with creditors and third parties to get more capital and avoid bankruptcy after the electronics retailer posted another quarter of increasing losses and declining sales.

According to an official statement, RadioShack is in advanced negotiations to bolster its balance sheet, including debt restructuring. The company is also working on a plan to consolidate its stores and is considering other measures after it posted a warning that it could be forced to turn to bankruptcy court, if it fails to find a way to boost its finances.

One of the senior analysts at Moodys – Mr. Mickey Chadha said that in case the rescue package passes, RadioShack would be provided with the opportunity to become more flexible in its turnaround strategy and prevent a bankruptcy filing in the near future. He said for the Financial Times: “Financing can give them some time, but it’s not going to solve the main issue, that people are not shopping in their stores.”

On Thursday, the U.S.-based company reported a quarterly loss estimated to $137 million, or $1.35 per share, but also shared that it was “actively exploring” options to deal with the problems. In comparison, the company revealed a deficit of $52.2 million, or 51 cents over the same period a year earlier. The net loss excluding some items amounted to $1 a share in the quarter ended August 2nd. The net debt of the company amounted to $478 million at the beginning of August, while its cash and cash equivalents were estimated to $183 million.

The Chief Executive Officer of RadioShack Mr. Joseph Magnacca explained that no details of recapitalization plans could be provided. He also said there was “no predetermined outcome” to restructuring negotiations.

RadioShack Corp. rose by 9.56% on Thursday in New York to close at $1.02 per share yesterday, marking a one-year change of -74.44%. The company is valued at $102.63 million. According to CNN Money, the 4 analysts offering 12-month price forecasts for RadioShack Corp. have a median target of $1.00, with a high estimate of $2.00 and a low estimate of $0.50. The median estimate represents a -1.96% decrease from the last price of $1.02.