Moody's: RadioShack's (RSH) Impasse with Lenders is Credit-Negative Event

RadioShack Corporation (NYSE: RSH) announcement that the terms on which its lenders are currently willing to provide the consent for its store closure program are not acceptable to the company and it is therefore scaling back its store closure program is credit negative because the majority of the stores slated for closure are underperforming and management will have to pursue other limited options of cost reduction programs to improve profitability. RadioShack was seeking consent from its lenders under its credit agreements to pursue a program to close up to 1,100 of its 4,297 company owned stores after posting disappointing holiday sales and a $191.4 million fourth-quarter loss. The company's loan agreements require lenders to sign off on more than 200 store closings a year.

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