Published: August 19, 2010
Fitch: No Rating Implications for RadioShack's Share Repurchase Announcement
CHICAGO - (BUSINESS WIRE) - Fitch Ratings does not anticipate any rating implications from
RadioShack Corporation's (RadioShack) announcement that its Board has
increased its share repurchase authorization to $500 million from $290
million. Fitch currently rates RadioShack's long-term Issuer Default
Rating (IDR), bank credit facility and senior unsecured notes 'BB'.
RadioShack had $680.4 million in debt outstanding at June 30, 2010. The
Rating Outlook is Stable.
The $500 million share repurchase authorization has no expiration date
and the company said a significant portion of the share repurchase
program may commence as soon as practicable through one or more
accelerated repurchase programs, open-market or negotiated purchases.
Fitch anticipates any share repurchases will be funded with cash, which
totaled $931 million as of June 30, 2010. As such, the repurchases will
reduce the company's liquidity, but have no impact on its gross
financial leverage. Fitch believes RadioShack's liquidity, after
considering the share repurchases, will remain adequate to meet upcoming
capital and debt service requirements including the $307 million
outstanding on the 7.375% senior unsecured notes maturing in May 2011,
which Fitch expects will be repaid with cash. However, reduced financial
flexibility increases the possibility that the company's ratings could
be pressured in the event of an unexpected weakening in the company's
operating performance or free cash flow generation.
The ratings continue to reflect Fitch's expectation that the company's
operating results and credit metrics will remain relatively steady in
the near term despite the soft sales trends in some of the company's
product platforms. The ratings also consider the company's cost cutting
efforts, positive free cash flow generation, and large and
geographically diverse store base as well as concerns about RadioShack's
long-term ability to grow revenues and earnings given the highly
competitive operating environment. RadioShack's total adjusted
debt/EBITDAR in the last 12 months (LTM) ending June 30, 2010, was 4.0
times (x) versus 4.1x in 2009. EBITDAR to interest plus rent remained
flat at 2.2x during the comparable time period.
Additional information is available at www.fitchratings.com.
Related Research:
--'The Retail Register, Summer 2010', dated Aug. 3, 2010.
Related Research:
The Retail Register -- Summer 2010
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=543167
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE.
Fitch Ratings
Primary Analyst
Tiffany Co, +1-312-368-3185
Director
70
W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Philip
Zahn, +1-312-606-2336
Senior Director
or
Media Relations,
New York
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com
Copyright © 2012, Business Wire, Inc., All rights reserved.
Copyright © 2012, NewsBlaze,
Daily News
Search News
