RadioShack cuts deal with Standard General and Sprint to sell 1,750 stores and declare bankruptcy
RadioShack finally made it official. A money-losing corporate zombie for the last several quarters as creditors circled, RadioShack finally threw in the towel on Thursday, declaring Chapter 11 bankruptcy and announcing a reorganization plan working with Standard General and Sprint to establish a “store within a store” retail model at up to 1,750 current Radio Shack outlets.
Negotiations are ongoing with various interested parties to liquidate all of the firm’s remaining assets.
RadioShack has close to 4,000 company-owned stores currently operating in the U.S. Of note, the firm’s over 1,000 dealer franchise stores worldwide, or the locations related to its Mexico or Asia operations are not included in the Chapter 11 filing or the other new agreements.
CEO Joe Magnacca said, “These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders.”
RadioShack has lined up $285 million in debtor-in-possession financing from its ABL lender group to provide liquidity during the transition. The company’s statement noted the DIP funding includes a roll up of related prepetition financing. The DIP facility will also provide up to $20 million in additional borrowing capacity.
Former RadioShack stores in new entity named “General Wireless”
As a part of the bankruptcy plan, RadioShack has entered an asset purchase agreement with General Wireless Inc., an affiliate of Standard General L.P. General Wireless will take over between 1,500 and 2,400 of RadioShack’s U.S. company-owned stores.
In finalizing the above transaction and assuring the orderly sale of remaining assets, RadioShack and associated firms have filed for Chapter 11 bankruptcy in Delaware. The statement notes that other parties will have a chance to make offers for RadioShack’s assets in a court-approved bankruptcy process. The above-mentioned sale agreement must also be approved by the bankruptcy court.
General Wireless is the name of the new business formed to acquire the former Radio Shack stores, has agreed in principle with wireless provider Sprint to launch a new dedicated mobility “store within a store” retail presence in up to 1,750 of the General Wireless stores.