RadioShack defaults on financial lifeline -

RadioShack defaults on financial lifeline

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By Jasmine Brown By Jasmine Brown

NEW YORK (CNNMoney) -- The end got even closer for RadioShack Monday when the New York Stock Exchange suspended trading of its shares, and a key lender notified it is in default of a financial lifeline.

The company filed a notice late Monday saying that a key lender, Salus Capital Partners, had found it to be default of a line of credit that was helping RadioShack stay in business.

Salus said RadioShack was not putting the cash it was receiving into an account where Salus could access it, which it said RadioShack was required to do under the loan agreement. Salus said it is considering legal action against RadioShack.

Around the same time, the NYSE pulled RadioShack from its listings, saying the company does not have a high enough valuation to be listed on the exchange. NYSE requires companies to keep a market cap of at least $50 million.

An earlier warning from the retailer suggested it had until early March before it faced delisting. The NYSE said what prompted action now was the fact that RadioShack "does not intend to submit a business plan" to the exchange to address how it could raise its market value.

Shares of RadioShack had lost 90% of their value in the last 12 month as investors worried that bankruptcy loomed.

The retailer has been low on cash. Struggling to compete with online stores like Amazon, losses mounted and RadioShack burned through all but $43 million of its cash by last November. Even counting its credit lines, the company only had $63 million available heading into the Christmas shopping season.

Although it once boasted about its vast retail network, saying that 90% of the U.S. population lived or worked within a few minutes of a RadioShack location, the company's 5,000 stores have been weighing it down.

Last March, the company announced a plan to close about 1,100 stores, but it's an expensive undertaking due to the cost of severance, liquidating merchandise and paying penalties to get out of leases.

It was only able to close 175 stores through the end of October. By year's end it was battling with its lenders including Salus to get the green light to close more.

RadioShack declined to comment on the delisting or the default notice.

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