In an ongoing sign of the times for the retail industry, RadioShack has filed for Chapter 11 bankruptcy protection, and announced yesterday that it will be selling off or closing all of its stores in the U.S.
The New York Stock Exchange stopped trading RadioShack stock (RSH) on Monday. The current price per share is now 10 cents. The company has said there will be “little return for equity holders” as a result of the bankruptcy proceeding. If you are an investor, you can learn more by clicking this link.
RadioShack currently has approximately 4,000 company owned stores in the U.S. At last count, it operated 77 stores in Iowa. The company said the impact on individual stores will be announced soon at its corporate restructuring website, RadioShackCorporation.com.
Joe Magnacca, the company’s CEO, said discussions are underway with interested parties to sell all of the company’s remaining assets. He said the steps announced last night were “the culmination of a thorough process intended to drive maximum value for our stakeholders.”
RadioShack has made customary first-day motions with the U.S. Bankruptcy Court for the District of Delaware intended to support the continuation of its day-to-day operations for customers, employees, vendors and suppliers, and other business partners during the restructuring. Part of that includes a request for court approval to continue employee wages and some benefits, and to honor some customer programs.
The court is expected to respond to those motions next week.
RadioShack has also secured a commitment for approximately $285 million in debtor-in-possession financing, which will provide it with liquidity during the sale process, which was also announced last night. Key components of that process include:
- RadioShack has signed an asset purchase agreement with General Wireless Inc., an affiliate of Standard General L.P. General Wireless has agreed to acquire between 1,500 and 2,400 of RadioShack’s U.S. company-owned stores. As part of this process, other parties will have an opportunity to submit offers for RadioShack’s assets in a court-approved process. The sale agreement is subject to court approval and other conditions.
- General Wireless, the entity formed to acquire the stores under the asset purchase agreement, has agreed in principle on terms with Sprint to establish a new dedicated mobility “store within a store” retail presence in up to 1,750 of the acquired stores. This agreement-in-principle is subject to negotiation of definitive documentation as well as court approval.
- In addition, RadioShack has filed a motion with the court to proceed with the closure of the remaining company-owned stores under an agreement with Hilco Merchant Resources. Stores that are closing are expected to sell remaining inventory.