Vince Martin
Long/short equity, value, gambling

RadioShack Is Not Worth The Gamble

Shares of RadioShack (NYSE:RSH) closed Friday down over 11 percent in response to a downgrade of its debt by Standard and Poor's on Thursday evening. S&P cut RadioShack's debt to 'CCC', defining the company as "currently vulnerable and dependent on favorable business, economic, and financial conditions to meet financial commitments." The ratings agency also warned that "a default could occur within 12 months," according to the Fort Worth Star-Telegram.

At first glance, the risks of a near-term default would seem premature. After recently paying off $214 million in convertible debt (a payment the company confirmed to several outlets), RadioShack should have about $250 million in cash and $386 million on a revolving credit facility. (Note: the $250 million...

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