UPDATE: BTIG Starts RadioShack (RSH) at Neutral; Four Key Elements Will Determine Fate

(Updated - March 14, 2014 9:07 AM EDT)

BTIG assumes RadioShack (NYSE: RSH) at Neutral.

Analyst Will Frohnhoefer notes four key events that will determine RadioShack's fate:

1. The outcome of its bank negotiations. If RSH cannot accomplish this it will likely need to file under Chapter 11, since the closings are key to stanching the loss of cash flow. We don't think RSH would have made this bold announcement without first floating the idea with its lenders, and a rational analysis of RSH's constituents' positions tells us this can be done, at a price.;
   
   
2. The next earnings release (or any delay of earnings). The company recent switched when its fiscal year ends. This will create a January stub period, complicating comparisons of this year's first quarter with last year's.;
   
   
3. A further capital raise. RadioShack has not left itself with many options. In the world of finance theory, they have three: a sale/leaseback financing of their owned real estate, a mandatory convertible offering, and a secondary offering of shares.; and
   
   
4. And, the drawdown of its remaining bank lines. As sales and stores diminish, so should inventory and receivables. RadioShack's borrowing base under its revolver is supported by these items, and so current availability is likely as good as it will get for the foreseeable future. RSH should borrow when it can now, because it will likely be unable to borrow all it needs later.

For an analyst ratings summary and ratings history on RadioShack Corp. click here. For more ratings news on RadioShack Corp. click here.

RadioShack Corp. closed at $2.22 yesterday, with a 52 week range of $2.02 - $4.31.

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