RadioShack up from lows, still weak post-earnings; coal sector mixed; Energy Future DIP breaks

By Stephanie N. Rotondo

Phoenix, June 10 – A distressed debt trader said RadioShack Corp.’s 6¾% notes due 2019 “rebounded for the lows” of the day after the company reported quarterly results.

The trader said the issue hit as low as 38½, but went out around 43 bid.

Another market source placed the issue in a 42¾ to 43¾ context, up from opening levels around 38½, but still down from a 48 to 49 range previously.

The stock (NYSE: RSH) also got hit, falling 16 cents, or 10.39%, to $1.38.

During the first quarter, same-store sales dropped 14% year over year. Total sales declined 13% to $737 million.

Net loss was $98.3 million, or 97 cents per share. That compared to a net loss of $28 million, or 28 cents per share, the year before.

Excluding certain items, the loss was 98 cents per share. Analysts polled by Bloomberg were expecting a loss of 51 cents per share.

Additionally, the company said it had drawn its credit line down $35 million and that it expected to use more borrowings throughout the year. The Fort Worth, Texas-based electronics retailer is also in process of adding more letters of credit.

Assuming RadioShack is able to cut costs and increase margins, the company has enough cash for the next year.

The results point to RadioShack’s continued struggle to regain market share and increase traffic in its stores. The company is moving forward with its revised plan of shuttering 200 stores this year and another 400 stores over the following two-year period. Initially, the company wanted to close 1,100 stores this year, but creditors refused to consent to that plan.

The company needed creditor approval to move forward with the massive closure or else it would breach certain credit facility covenants.

Alpha weak, Walter firm

Alpha Natural Resources Inc.’s debt was “if anything, maybe a smidge lower,” a trader said.

He saw the 6% notes due 2019 closing around 73½.

Another market source deemed the 6¼% notes due 2021 down a point at 71½ bid.

Elsewhere in the coal space, Walter Energy Inc.’s 11% PIK notes due 2020 were “still creeping up,” a trader said, seeing the issue trade in an 81 to 82 context.

The 9 7/8% notes due 2020 held in around 60, he said.

Energy Future DIP breaks

Energy Future Intermediate Holding Co. LLC’s (EFIH Finance Inc.) $1,325,000,000 24-month superpriority first-lien debtor-in-possession term loan (Ba3/BB) broke for trading on Tuesday, with levels quoted at par ¼ bid, par 5/8 offered on the open and then it moved up to par 5/8 bid, par 7/8 offered, according to a market source.

Pricing on the loan is Libor plus 325 basis points with a 1% Libor floor and it was issued at par, after tightening the other day from 99.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Bank of America Merrill Lynch, Morgan Stanley Senior Funding Inc., RBC Capital Markets and Union Bank are leading the deal that will be used to fund Chapter 11 expenses, to refinance existing first-lien notes, for adequate protection payments, working capital and general corporate purposes and to comply with any legal and/or regulatory requirements.

Energy Future is a Dallas-based power generation company and utility operator.

Sara Rosenberg contributed to this article

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