Updated! Fort Worth, Texas — While most of America spent yesterday engrossed in the Super Bowl, RadioShack was reportedly working on a bankruptcy deal with lead lender Standard General.
According to the Wall Street Journal, the ailing CE chain may have chosen the hedge fund to enter a stalking-horse bid on the company, which would set a base price for its assets in a bankruptcy sale.
But RadioShack may also be charting a second, more drastic course: liquidation. According to another report, by Bloomberg, the chain is prepared to sell half its 4,000-plus stores to Sprint and shut down the remainder. While the carrier and the retailer have discussed co-branding the locations, people privy to the talks said, the stores would likely operate as Sprint showrooms.
Stores could also be shuttered under the Standard General scenario. The Journal cited “people familiar with the matter” who said that while the parties are still hammering out the details of a deal, it may also call for a greatly reduced store base.
The newspaper also reported that some RadioShack staffers have been instructed to clear out numerous stores this month by shipping premium smartphones to nearby locations and slashing prices on remaining inventory.
RadioShack CEO Joe Magnacca has long argued for shutting as many as 1,100 unproductive or redundant stores, or a quarter of the store base, but has been repeatedly blocked by term-loan lender Salus Capital Partners.
Standard General replaced GE Capital as lead lender on the company’s $535 million asset-based loan (ABL) last year, and provided it with $120 million in cash to help buy inventory and fund operations through the holiday season in exchange for additional equity and a majority of seats on RadioShack’s board.
The chain, which has been steadily losing market share and hemorrhaging cash, was expected to file for Chapter 11 bankruptcy protection as early as today.
Ironically, it was one year ago that RadioShack mounted a comeback campaign during Super Bowl that famously poked fun at its stodgy image by enlisting 1980s-era celebrities.