MIAMI -Chapter 11-bound Let's Talk Cellular signed an agreement last week that will sell the majority of the cellphone chain's assets to a subsidiary of Nextel for an estimated $32 million in cash.
The deal has Let's Talk Cellular, which filed for Chapter 11 protection last April in the U.S. Bankruptcy Court for the District of Delaware, selling 200 of its 240 stores and its back-office operation to wireless communications provider Nextel, said Let's Talk Cellular founder and CEO Brett Beverage.
The chain's remaining 40 stores, which are located in regions that the Reston, Va.-based Nextel does not service, will remain open until they are sold off.
"This is a bittersweet moment for me," Beverage said, "We had managed to turn the company around and experienced our most profitable month ever last December, but under Chapter 11 we had to maximize the return to our creditors. Based on where we were, we had to do the deal with Nextel because it represented the least risk for our creditors."
Nextel plans to rebrand the stores with the Nextel name and sell only Nextel products, a company spokesman said. However, the merchandise mix could be expanded down the road to include Bluetooth and other wireless products.
The primary reason for the purchase, the company said in a written release, is the stores will give Nextel a new point of contact to service and attract new customers to its wireless service. Nextel did purchase the rights to the Let's Talk Cellular name, but the company did not say whether it will continue to be used.
Beverage expects to close the deal by late April and will continue to operate the chain until that point. Nextel has assured him that the Let's Talk Cellular retail and back-office workers will be retained, he said. "Nextel will need these people to handle the retail side of the business, since Nextel has no experience itself with this."
The Nextel spokesman was not as optimistic, saying the deal first must be approved by the bankruptcy court and could take up to six months to complete. The money derived from the sale will go toward paying off the chain's creditors, Beverage said, although common shareholders will not receive any compensation.