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RadioShack gets second default notice from Salus Capital on term loan
By Kali Hays
New York, Feb. 2 – RadioShack Corp. received a second notice of default from Salus Capital Partners, LLC related to a $250 million term loan facility provided by Salus, according to an 8-K filed Feb. 2 with the Securities and Exchange Commission.
As previously reported, the company received the first notice of default Dec. 1 after Salus alleged covenant breaches under the term loan.
Salus now claims that an ongoing event of default has occurred as RadioShack has not paid all proceeds into residual accounts designated by Salus to receive all funds transferred by the company into its deposit accounts.
According to the 8-K, after the first notice of default, Salus sent a notice to RadioShack’s depository bank instructing the bank to prevent the company from withdrawing any finds and directing the bank to transfer all funds to Salus.
If it is determined that an event of default has occurred and is continuing under the credit agreement, it would also constitute an event of default under a December 2013 credit agreement with Cantor Fitzgerald Securities.
Moreover, if the maturity dates of the outstanding obligations with Salus are accelerated, an event of default will be triggered under a May 2011 indenture with holders of $ 325 million of RadioShack’s 6¾% senior notes guaranteed by Wells Fargo Bank, NA, according to the 8-K.
Salus is demanding that RadioShack provide a written account of all proceeds it has received since Dec. 1 and deposit any and all proceeds into Salus’ residual account immediately.
RadioShack is a Fort Worth-based consumer electronics retail chain operator.
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