RadioShack eyes rights offering in 2015, ends Q3 with $63 million liquidity, $842 million debt

By Lisa Kerner

Charlotte, N.C., Dec. 11 – RadioShack Corp. ended its third quarter on Nov. 1 with total liquidity of “just under $63 million,” said interim chief financial officer Holly Etlin during a conference call on Thursday.

Liquidity included $43.3 million of cash and cash equivalents and $19.3 million of availability under its 2018 credit agreement. The total was net of $944 million of letters of credit and $233.9 million in outstanding borrowings.

Total debt at quarter-end was about $842 million.

Etlin said the company continues to manage its spending, and “liquidity continues to be constrained.”

RadioShack is preparing for a potential rights offering in early calendar 2015 and talking to a number of parties about additional sources of capital, according to the CFO.

Chief executive officer Joseph C. Magnacca discussed RadioShack’s plans to right size its capital structure and said “efforts are geared toward maximizing our progress in the retail segment, managing our mobility business for profitability and accelerating our cost containment initiatives.”

The majority of savings “are in our control and in process,” Magnacca said.

On Oct. 3, RadioShack announced a recapitalization plan.

“While this was an important positive step in our efforts to address the company’s balance sheet...there are other steps we need to take to recapitalize our company,” Magnacca said.

“We face significant challenges, including from our term loan lenders, who claimed last week that the Oct. 3 recapitalization agreements breached their credit documents.”

Magnacca said the company disagrees with the lenders and filed an 8-K with the Securities and Exchange Commission earlier in the week outlining RadioShack’s position.

To date, the company has continued to receive support from its revolving credit lenders, according to the CEO.

Financial highlights

RadioShack’s third-quarter total net sales and operating revenues were $650.2 million, compared to $775.4 million last year.

The company reported a third-quarter operating loss of $114.1 million. This compares to an operating loss of $128.6 million for the same period last year.

RadioShack is a Fort Worth-based consumer electronics retailer.

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