Moody's: RadioShack not out of woods yet

Moody's Investors Service said RadioShack Corp.'s (Caa2/negative) announcement that Standard General LP and other investors have replaced GE Capital as lead lender under the company’s $535 million asset-based revolving credit facility and $50 million senior secured first-lien term loan and that the existing shareholders Standard General LP and Litespeed Management LLC, along with other investors, will also provide $120 million of additional liquidity to be used to cash collateralize letters of credit for the company will not by itself solve the company's primary problem, which is anemic store traffic, margin erosion and chronic revenue declines.

The agreement will buy the company some additional time to implement its turnaround strategy, the agency said, but unless management is successful in stabilizing the company's margins and reversing the precipitous revenue declines, Moody’s expects the company to find itself in the same precarious position it is in today in less than 12 months.

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