RadioShack, which owns roughly 4,000 stores in the United States and filed for bankruptcy on Thursday, started a final sale at 1,700 of its stores over the weekend to aid its restructuring. The sale was prompted by Friday’s ruling from Judge Brendan Shannon, who permitted it.
Meanwhile, General Wireless, a unit of investing firm Standard General, intends to purchase between 1,500 and 2,400 of those stores. Any interested buyer of RadioShack may be able to enter an agreement with wireless service provider Sprint, which apparently made a deal with Standard General to operate stores-within-stores at 1,750 outlets, which would sell a combination of Sprint products and services and RadioShack goods. According to RadioShack’s lawyer, “More than 10” potential bidders have considered buying RadioShack outlets.
Reportedly, 2,100 RadioShack stores will be closed. RadioShack will attempt to sell the rest. Shannon said the company had to consult unsecured creditors before it implemented any strategy. It owes bondholders $330 million, trade creditors $124 million, and landlords $30 million.
RadioShack wants to secure $285 million of Chapter 11 financing, but lender Cerberus Capital Management, which RadioShack owes $100 million to, has balked, pointing out that RadioShack has $44 million in cash and will garner another $74 million from its closing sales by the end of the month. Cerberus said that the proposed $285 million would only give RadioShack about $13 million worth of new borrowing power and would cost the company over $6 million in fees. Most of the funding would refinance existing top-ranking debt, including money owed to Standard General.
Salus Capital Partners LLC, which RadioShack owes $150 million, has no objection to the bankruptcy financing.