Derivatives trade group says RadioShack has not failed to make debt payments

IndustriesAssociated Press

A trade group ruled Friday that RadioShack has not failed to make debt payments, despite a lender accusing the troubled electronics retailer of violating terms on a $250 million loan.

A panel with the International Swaps and Derivatives Association, a trade group that represents banks and other companies that trade derivatives, ruled that the Fort Worth, Texas, company was keeping up with its debt obligations. The ruling means that investors who had bought derivatives as insurance against a RadioShack default were not entitled to payouts.

Continue Reading Below

Earlier this month, RadioShack lender Salus Capital Partners said the electronics retailer had breached loan covenants and was demanding full repayment of the $250 million loan, plus interest. RadioShack said Salus' position was "wrong and self-serving."

RadioShack has struggled to compete as online retailers take up a large portion of its sales. The company said in March that it planned to close as many as 1,100 of its U.S. stores, which would have left it with more than 4,000 locations.

But it couldn't reach an agreement with lenders about a cut that size, and said it would close fewer stores and find other ways to cut back on spending. In September, RadioShack said it might need to file for Chapter 11 bankruptcy protection.

Soon after, it reached an agreement with investors shortly afterward to restructure part of its debt.

Shares of RadioShack Corp. were down 1 cent at 50 cents in afternoon trading.