Standard General bids to save RadioShack from oblivion
Bloodthirsty creditors: Let's just break her on the rocks
Historic retailer RadioShack, currently under Chapter 11 bankruptcy protection, will learn its fate today, as its assets go up for auction, although its options for survival look distinctly limited.
A $145.5m bid from Standard General LP, a hedge fund which is also one of RadioShack’s lenders, could save 9,000 jobs and 1,723 out of the 2,400+ stores, and keep the the outlets open as a functioning business.
However, it's a long way shy of RadioShack’s estimated $500m debts, and other bidders would rather see the remaining inventory sold and the company go to well and truly to the wall.
Adam Harris, lawyer for Cerberus Capital Management, another RadioShack lender, was quoted by The Wall Street Journal as saying: “We’ve gone from selling a Bentley to selling a Ford to selling a used Vespa.”
RadioShack has had a troubled downward slide, with John Feray, the company's CFO, quitting last September.
The Standard General deal would work in conjunction with mobile network Sprint to create a separate company called General Wireless.
In February, the company issued a release, which said:
RadioShack has signed an asset purchase agreement with General Wireless Inc., an affiliate of Standard General LP ("Standard General"). General Wireless has agreed to acquire between 1,500 and 2,400 of RadioShack's US company-owned stores.
To effectuate this transaction and an orderly sale of the company's remaining assets, RadioShack and certain of its US subsidiaries have filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code in the US 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.
That "court-approved process" has now come to a close and the fate of the company will be decided this week. ®