RadioShack Corp will use a $285 million debtor-in-possession
(DIP) financing from DW Partners LP, a credit-focused fund manager, to back its
operation during Chapter 11, according to a company statement. The troubled
electronics retailer filed for Chapter 11
bankruptcy
protection on Thursday saddled with $1.38 billion in debt, according to court
documents. The DIP financing includes a $15 million subfacility for new
letters of credit. It also rolls up the company's prepetition revolver and
first-in, last-out facility. It has $20 million of incremental borrowing
capacity.
RadioShack's prepetition debt includes a $535 million credit
facility due in 2018 with approximately $250 million outstanding. Radio Shack originally lined up the 2018 credit agreement
with a $535 million asset-based revolver, also provided by DW Partners, and a
$50 million asset-based term loan in December 2013 with a lenders group led by
GE Capital. According to court documents, the lenders sold their interests to
Standard General LP on October 3, 2014.
At that time, the credit agreement was amended, splitting
the $535 million revolver into a $275 million term loan, a $120 million letter
of credit facility and a $140 million revolving facility. This credit agreement
is secured by a first-priority lien on the current assets and second-priority
lien on the fixed assets, intellectual property and equity interests of
subsidiaries.
In addition to the loan debt, RadioShack has $330 million
outstanding of 6.75 percent unsecured notes due May 15, 2019. Hedge fund
Standard General is acting as the stalking horse bidder for the purchase of up
to 2,400 stores. RadioShack is proposing an expedited sale process that would
be completed within 45 days. Standard General has separately reached an agreement with
Sprint to form a "store within a store" in up to 1,750 of the Radio
Shack locations.
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