RadioShack defends position in dispute with lenders

RadioShack reiterated on Monday that it hasn’t breached the terms of a $250 million loan and won’t agree to demands for payment by the two lenders on the deal.

In a filing with the Securities and Exchange Commission, the Fort Worth-based electronics retailer said it isn’t in default and won’t pay Salus Capital Partners and Cerberus Capital Management. The lenders claimed in a letter last week that RadioShack had violated four sections of the credit agreement governing the $250 million second-lien term loan.

“The demand for immediate payment or any other exercise of remedies is without merit,” says the company statement.

Salus, which holds part of the $250 million loan, said the company defaulted on terms including receiving a financing package from its largest shareholder, Standard General, which should be prohibited from such a deal because the investor is considered an affiliate. RadioShack said the amount of stock the hedge fund owns doesn’t exceed the threshold, therefore the investor shouldn’t be treated as an affiliate, according to the statement.

Cerberus also provides part of the second-lien financing.

Standard General arranged a $585 million in a rescue deal in October that gave the retailer additional liquidity to stock up inventory for the holiday season.

RadioShack shares (ticker: RSH) fell 3 cents, or 5 percent, to 56 cents Monday.

The company is scheduled to release its third-quarter financial results Thursday.

This story was originally published December 8, 2014 at 12:47 PM with the headline "RadioShack defends position in dispute with lenders."