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Fitch cuts RadioShack notes to CC, rates loans B, B-
Fitch Ratings said it affirmed RadioShack Corp.'s long-term issuer default rating at CCC and $450 million senior secured revolving credit facility at B/RR1, $50 million senior secured term loan at B/RR1, $100 million senior secured term loan facility at B-/RR2 and senior notes to CC/RR6 from CCC-/RR5.
The ratings reflect the significant decline in RadioShack's profitability, which has become progressively more pronounced over the past four quarters, the agency said.
Results have been disappointing, due in particular to pressure on the company's mobility segment, leading to a marked deterioration in the company's credit profile, the agency noted.
The company's lease adjusted debt-to-EBITDAR ratio rose to 6.8 times as of June 30, from 5.1x at the end of 2011. Fitch said it now expects leverage will trend above 7x over the next two years, as EBITDA will likely erode further.
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