RadioShack Supplier Declined to Help Rescue Effort

RadioShack Corp. has tried--unsuccessfully so far--to convince a major supplier to alter its terms as the struggling electronics retailer works to avoid a bankruptcy filing.

The company, which disclosed the effort in a securities filing Monday, didn't name the vendor or spell out the issues under discussion. But it has been in talks with wireless carriers including AT&T Inc. and Sprint Corp. to ease the terms under which they provide equipment that RadioShack resells, people familiar with the matter said.

The talks with the supplier haven't borne fruit but are continuing, the company said in the filing. RadioShack warned earlier this month that it was quickly running low on cash and could be forced to seek bankruptcy protection soon if it can't find a refinancing option.

The company has been considering a $585 million financing package from hedge find Standard General LP and investment bank UBS AG. Those talks were continuing Monday and will likely come to a head this week or not at all, people close to the discussions said.

Meanwhile, RadioShack said it is still exploring other restructuring scenarios with its lenders, bondholders, shareholders and store landlords.

Talks with vendors could be crucial. The chain has been forced to put up letters of credit to secure products to sell in its more than 4,400 stores. Mobile devices and accessories drive more than half of RadioShack's sales. Easing the terms of those device deliveries would give the retailer more money to work with as it gears up for the holiday shopping season..

RadioShack has struggled with years of losses as demand for many of its products dwindles and rivals lure away its customers. The company last year hired Chief Executive Joe Magnacca to reverse the chain's decline with a more aggressive store overhaul, but the effort has so far failed to pull the brand out of its tailspin.

A steep drop in sales over the early summer left the company with $30.5 million in cash on Aug. 2--about $6,800 per store. The chain also said it has $152 million available under a line of credit at that time. it.

Thomas Gryta and Ryan Knutson contributed to this article.

Write to Drew FitzGerald at [e-mail] and Gillian Tan at [e-mail]

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