Dick Schulze

The Best Buy-out just got harder

October 25, 2012: 6:14 PM ET

There's more to it than just a slumping stock price.

FORTUNE -- Best Buy shares took a beating today, after the electronics retailer announced a management shakeup and warned that third quarter earnings would be significantly worse than previously expected. Shares were off more than 10% to finish the day at $15.17 a piece, which represents a market cap of just $5.7 billion.

To some, this means that Best Buy (BBY) is just one step closer to being acquired by company founder Dick Schulze. But I wouldn't be quite so sure.

For starters, where is the offer? On August 27, Minneapolis-based Best Buy said that Schulze could see the company's books and put together an investor group (something otherwise permitted by Minnesota law). He then would have 60 days to put together a fully-financed offer. According to the Gregorian calendar (otherwise known as the Outlook calendar), today is Day #60.

A source close to Best Buy says that Schulze now actually has until sometime in mid-to-late November, but was unclear as to exactly why. Perhaps he asked for, and received, a 30-day extension (as we mentioned was possible at the time). Or maybe the deal was reworked or the clock actually started later. All I know is that Best Buy had been quite adamant that it didn't want the process bleeding into the holiday shopping season, so I can't imagine that Schulze has until mid-November and then could get a 30-day extension from that point (unless its recent stock woes have destroyed is leverage).

But leaving due dates aside, conventional wisdom seems to be that Schulze's job gets easier the worse Best Buy performs. It's a pricing argument. The lower Best Buy's stock sinks, the less outside capital Schulze needs to raise.

What it forgets, however, is that Schulze isn't only propositioning private equity partners like Leonard Green and TPG Capital. He also needs to secure billions of dollars in leveraged loans, and banks pay more attention to credit risk than to the check size.

Best Buy already was a junk bond deal before the latest financial guidance, which means that today it smells even worse. I've been hearing from private equity sources that many banks have expressed serious doubts -- outside of Credit Suisse (CS), which is working with Schulze -- and that today's news could be the final straw. And, given the amount of debt we're talking about (in excess of $5 billion), Schulze needs several banks to step up.

To be sure, Schulze is under a lot of pressure to put something on the table. He's a business icon in Minneapolis, and put his credibility on the line by initially negotiating with Best Buy via press release. But, in the end, it may not be up to him.

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