Circuit City Receives a Lifeline
Circuit City is not going down without a fight. Just a day after filing Chapter 11 bankruptcy, Bank of America comes to the rescue. To the tune of $1.1 billion. Yowza.
Not sure if that's even going to be enough — the company is $2.3 billion in debt, owing billions to companies like LG, Samsung, and Sony. Not exactly companies you want to blow off.
This credit line is hoped to be enough to pay salaries and secure new merchandise to carry the store until it's expected to get out of debt next year.
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Currently, Circuit City owes Hewlett-Packard $119 million and Samsung $116 million. Doing the math — their assets are $3.4 billion, they owe $2.3 billion, and the bailout from Bank of America is $1.1. Nice.
The company is still planning on closing the 155 blacklisted stores and cutting 20% of their employees. Darn it. One of those stores was about a mile from my house.
If they fail, not only will Bank of America be behind yet another failed loan, we will lose the only bricks-n-mortar competition to Best Buy. Competition is always a good thing. —Leslie Shapiro