According to the gadget shop, it has made an agreement with lenders led by Standard General and Litespeed Management, who will help the company restructure their existing debt. The deal is made to help RadioShack to finance their operation this coming holiday season, wherein they can get a chance to perform well. The bank and other investors will serve as the major lenders instead of GE Capital.
The Standard General is the brand's major shareholder, and has 10% ownership of the organization. Through this financial aid, it will give bigger responsibility and ownership in RadioShack.
The assistance must keep the company from leading to bankruptcy as it will go on with its operation and comeback plan.
The top officials of the electronics company have been negotiating with creditors, landlords and investors to give ample time for their comeback plan. However, the time is running out. The agency for credit rating is expecting the organization to lose its money by late 2015.
While the financial aid gives extended life for RadioShack, it will still be uncertain if it can surpass the struggle in sales. Public is aware of the struggles that the company is going through and it will be harder for them to compete with their rivals and online shops like Amazon.
RadioShack is concentrating on tablets and smartphones as major sales contributors. These gadgets get them going in the competition and low-margin items.
The mobile phones are helping out the high-margin items like GPS devices and digital cameras.
The credit deal could resort the company to close some branches, the non-performing ones. This will give them enough cash and pay leases. According to their statement, they might close down more than 1000 units. However, few months after the announcement, the company only stopped 200 branches since lenders refused to give cash for the closures.
