Monarch Alternative Capital LP abandoned negotiations to take over a $140 million loan to RadioShack Corp. as the electronics retailer struggled to reach a deal with lenders on a turnaround plan, Bloomberg News reported yesterday. Monarch, run by Michael Weinstock, backed out of talks it was leading with two other hedge funds to acquire the asset-backed senior loan and renegotiate the terms. The company continues to talk with the other funds and with other potential lenders. RadioShack is seeking to refinance the debt to loosen terms that may restrict the amount it can borrow under the loan in March. That would give the company time to implement a turnaround plan and avoid a cash crunch that management said in a Sept. 11 regulatory filing may lead to bankruptcy. The loan is part of a $585 million funding package arranged last month by RadioShack’s largest shareholder, Standard General LP, that gave the retailer enough cash to operate through the holiday season. Any deal to refinance the debt will be contingent on whether a key RadioShack lender, Salus Capital LLC, agrees to a company plan to close underperforming stores, one of the people said. Salus owns part of a $250 million, second-lien loan.
