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.

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.