RadioShack to Close Dozens of Indiana StoresPosted: Updated:
As part of a reorganization plan, Texas-based RadioShack Corp. (NYSE: RSH) has announced it will close nearly 1,800 U.S. stores, including around four dozen stores in Indiana. The retailer filed for Chapter 11 bankruptcy protection last week. February 9, 2015
FORT WORTH, Tex. (February 5, 2015) - RadioShack Corporation announced today several actions intended to maximize value for the Company's stakeholders.
RadioShack has signed an asset purchase agreement with General Wireless Inc., an affiliate of Standard General L.P. ("Standard General"). General Wireless has agreed to acquire between 1,500 and 2,400 of RadioShack's U.S. Company-owned stores. To effectuate this transaction and an orderly sale of the Company's remaining assets, RadioShack and certain of its U.S. subsidiaries have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. 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. RadioShack's foreign subsidiaries and its franchisee-owned stores are not included in the filing.
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, the Company 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. A list of the stores slated for closure will be posted in the near future on the restructuring information section of the company's web site at www.radioshackcorporation.com. Stores that are closing are expected to sell remaining inventory.
RadioShack currently has approximately 4,000 company owned stores in the U.S. Its more than 1,000 dealer franchise stores in 25 countries, the stores operated by its Mexican subsidiary, and its Asia operations are not included in the Chapter 11 filing or the agreements announced today.
Discussions are underway with interested parties to sell all of the company's remaining assets.
Joe Magnacca, RadioShack's chief executive officer, said, "These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders."
RadioShack has made customary first-day motions with the Bankruptcy Court intended to support the continuation of its day-to-day operations for customers, employees, vendors and suppliers, and other business partners during the restructuring. As part of that, it is seeking Court approval to continue employee wages and certain benefits and honor certain customer programs. The motions are expected to be addressed by the Court in the coming days.
The Company has also secured a commitment for approximately $285 million in debtor-in-possession financing (DIP) from its current ABL lender group, led by DW Partners, LP. The DIP is intended to provide it with liquidity during the sale process. The DIP funding includes a roll up of the Company's prepetition revolver, letters of credit, and FILO facility. In addition, the facility will provide up to $20 million in incremental borrowing capacity.
Pursuant to the auction process the Company has filed for approval by the Court, all qualifying parties will have an opportunity to submit offers for evaluation through a Court-supervised competitive bidding process. Any sale will be subject to Court approval and other closing conditions. There can be no assurance that a sale will be consummated at the conclusion of this process.
The Company's legal advisor is Jones Day, its investment banker is Lazard Freres, and its financial advisors are The MAEVA Group and FTI.
Additional information about the process is available in the Restructuring Information section of www.RadioShackCorporation.com. Claims information is available there and at http://cases.primeclerk.com/radioshack, or by calling the Company's restructuring hotline at 844-794-3477 or +1-917-606-6439 (international).
About RadioShack Corporation
RadioShack is a leading retailer focused on connecting customers with personalized solutions and discovering what's possible through the latest in consumer technology. For more information on RadioShack Corporation, please visit www.radioshackcorporation.com.
Source: RadioShack Corp.