Corporate Finance

Delisting, Default Doom RadioShack

The 90-year-old company is on the verge of bankruptcy, as potential buyers of its storefronts wait in the wings.
Katie Kuehner-HebertFebruary 3, 2015
Delisting, Default Doom RadioShack

The delisting of RadioShack’s stock on the New York Stock Exchange and a possible legal action for defaulting on a loan is the latest in the growing list of troubles for the beleaguered electronics retailer. The latest news comes amid speculation that Amazon could be a potential buyer of the 90-year-old company — or it least some of its brick-and-mortar stores.

A CNN Money story said that the NYSE suspended trading on RadioShack’s shares after the company opted not to submit a business plan to explain to the exchange how it could raise its market value to $50 million, the minimum average value required to be listed over a 30-day period. RadioShack’s shares have lost 90% of their value in the last 12 months.

Moreover, Salus Capital Partners said it is considering legal action against RadioShack, claiming the company had defaulted on a loan, CNN reported. Last March the company said it planned to close roughly 1,100 stores, but as of October, had only been able to close 175 stores.

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Meanwhile, Amazon is reportedly eyeing some of RadioShack’s storefronts and may buy them after the retailer files for bankruptcy, according to unnamed sources cited by Bloomberg. Seattle-based Amazon wants to use the stores to showcase its hardware products, including its Kindle and Fire Phone, and to serve as pickup and drop-off centers for online customers.

Other potential bidders for some of RadioShack’s 4,000-plus stores include Sprint and the investment group behind Brookstone, according to Bloomberg. Liquidation would help RadioShack avoid a battle with lenders over control of the company.

In October, hedge fund Standard General arranged $535 million of first-lien loans for RadioShack as part of a rescue financing package and as the retailer’s biggest shareholder, would serve as the lead bidder in a filing and provide debtor-in-possession financing after a filing, sources told CNN.

But liquidation isn’t inevitable, CNN wrote: other bidders could emerge that would buy the entire company and keep it running.