Troubled electronics retailer RadioShack Corporation (NYSE:RSH) continues to deny claims that it defaulted on the terms of a $250 million loan from Salus Capital Partners LLC and Cerberus Capital Management LP. In a regulatory filing released on Monday, December 8th the firm said the arguments of its lenders have no merit and it will not be acceding to their demands for repayment.
Statement from RadioShack
In its filing, the company noted, “The demand for immediate payment or any other exercise of remedies is without merit.”
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When the demand for repayment from the lenders first surfaced last week, RadioShack called claims by the lenders “wrong and self-serving.”
Details on the Radioshack loan spat
Salus Capital Partners and Cerberus Capital Management provided RadioShack Corporation (NYSE:RSH) with a $250 million loan a year ago that helped keep the company afloat. They argue that RadioShack defaulted on that loan when it secured a new, separate credit line from Standard General in October.
Of note, the claim of default comes after the two lenders’ efforts to block the firm’s plan to close up to a quarter of its 4,300 U.S. stores and get rid of more than $200 million in costs.
RadioShack Corp. made it clear on Monday doesn’t believe the lenders’ demand for immediate payment is valid and has no intention of coughing up the cash. The company also confirmed that its revolving loan commitments remain unchanged at $535 million.
Bad timing for dispute
Retail industry analysts note that this he disagreement with its lenders comes at a bad time, as the struggling retailer is trying to sell enough merchandise to get through the holiday season into next year, when the company is expecting more recapitalization.
In a related note, RadioShack Corporation (NYSE:RSH) announced last week it would no longer make make matching contributions to employees’ retirement funds as a method to cut expenses.