RadioShack Shakeup Spotlights Debt Refinancing

The departure of RadioShack’s CEO this week sets up the electronics chain for a debt refinancing that may reduce the amount of money bondholders would recover in a bankruptcy.

The retailer may use second-lien debt to refinance $375 million of convertible notes due next year, according to a report from JPMorgan, which cited a meeting it had with RadioShack management. That would lower the recovery rate on the company’s $325 million of 6.75 percent senior notes due in May 2019 to less than 50 percent from more than 60 percent, according to the firm, which cut its rating on RadioShack’s debt to “underweight” from “neutral.”

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