NEW YORK (Reuters) - RadioShack Corp has secured a fresh round of financing from GE Capital, two people familiar with the matter said on Monday.
The news, which was first reported by the Wall Street Journal, boosted shares of the U.S. consumer electronics chain by 7 percent to $3.52 on Monday.
General Electric Co’s GE Capital will extend $835 million (517 million pounds) in new financing secured by inventory and other assets - $585 million in the form of a credit facility and $250 million in a second-lien term loan, one of the people said.
Reuters reported earlier this month that GE Capital, which tends to make large asset-based lending deals, was among many companies that made financing offers to the retailer.
RadioShack had been looking to refinance existing debt in part to cut borrowing costs. The company’s previous lenders, led by Bank of America Corp and Wells Fargo & Co, had also made offers for new financing, but GE offered a more attractive advance rate, one of the people said.
A spokesman for GE Capital declined to comment. A spokeswoman for RadioShack did not return a call seeking comment.
New capital could help assure vendors and other key partners that RadioShack has enough cash to fund turnaround efforts led by Chief Executive Joe Magnacca.
Sales at RadioShack have been falling rapidly amid executive departures, strong competition and an image problem. Analysts say that despite a ubiquitous presence in the United States, RadioShack has not done enough to transform itself into a destination for mobile phone shoppers or to make itself attractive to younger consumers.
Reporting by Dhanya Skariachan and Nick Brown; editing by Phil Berlowitz, Ken Wills and Matthew Lewis