A. Lee Graham
RadioShack Corp. has completed $835 million in new financing as the Fort Worth firm continues to pursue an operational turnaround.
Included in the new financing is a $585 million senior secured credit facility led by GE Capital’s Corporate Retail Finance division and a $250 million secured term loan led by Salus Capital Partners LLC.
RadioShack said the new financing will be used to refinance existing debt and provide about $200 million of incremental liquidity, all of which are expected to continue strengthening the company’s balance sheet as it continues to pursue an operational turnaround.
In July, the company outlined five pillars of a turnaround plan: repositioning the brand; revamping the product assortment; and reinvigorating the store experience, operational efficiency and financial flexibility, said CEO Joseph C. Magnacca in a news release.
“This new financing fulfills the last pillar and provides the financial flexibility and ample runway to turn this business around,” Magnacca said.
“We are pleased to have a consortium of leading finance companies partner with us and participate in this new financing.”
GE Capital said it looks forward to aiding the RadioShack turnaround.
“Our business is helping retailers with efficient capital support for their operations including retailers that are in the midst of transition,” said Jim Hogan, senior managing director, GE Capital, Corporate Retail Finance.
“We are pleased to be the lead arranger for the new facility and support the RadioShack team as they work to successfully turn around this longstanding brand in the retail landscape,” Hogan said.
The new credit facility was arranged and led by GE Capital, Corporate Retail Finance and has been syndicated to CIT Corporate Finance and RBS Citizens, N.A. Terms include a five-year duration, a $535 million revolving line of credit and a $50 million term loan. The term loan is a first-in-last-out term loan which was drawn and funded at closing and carries a rate of LIBOR (London Interbank Offered Rate) plus 4 percent.
Leading the new $250 million secured term loan was Salus Capital. Terms of the loan include a five-year duration and a rate of LIBOR plus 11 percent. Acting as financial adviser to RadioShack on the news financing was the Peter J. Solomon Co.
To date, RadioShack has exited the existing $450 million credit facility and the two accordions totaling $75 million and has retired an existing $100 million second lien term loan. With the newly announced financing and the existing $325 million of 6.75 percent unsecured notes due in 2019, the company holds about $625 million dollars of debt outstanding.