RadioShack files for Chapter 11; to sell some stores, close remainder

New York, Feb. 5 – RadioShack Corp. filed for Chapter 11 on Thursday to implement the sale of between 1,500 and 2,400 of its company-owned stores in the United States to General Wireless Inc., an affiliate of Standard General LP.

The remainder of the 4,000 company-owned U.S. stores will be closed.

RadioShack’s 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.

“These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders,” said Joe Magnacca, RadioShack’s chief executive officer, in a news release.

The company has obtained a commitment for $285 million of debtor-in-possession financing from its current ABL lender group, led by DW Partners, LP.

Under the restructuring, RadioShack has signed an asset purchase agreement with General Wireless, an entity formed by asset manager Standard General for the transaction.

The sale will be supervised by the bankruptcy court, and other parties will be able to bid for the stores.

General Wireless has an agreement in principle with Sprint for a “store within a store” retail presence in up to 1,750 of the acquired stores.

Sprint and General Wireless intended to establish co-branded stores that will exclusively sell mobile devices across Sprint’s brand portfolio as well as RadioShack products, services and accessories.

RadioShack is seeking court approval to close the remaining stores under an agreement with Hilco Merchant Resources.

Discussions are under way to sell the remaining assets.

In its Chapter 11 filing, RadioShack listed more than $1,200,300,000 of assets and $1,387,000,000 of liabilities.

The liabilities include $325 million of unsecured debt securities. Wilmington Trust, NA as trustee for bonds is the largest unsecured creditor with a $329.68 million claim. Sprint PCS is the second largest unsecured creditor with a trade debt claim of $6.07 million followed by Assurance Service Protection Inc. of Atlanta with $4.1 million of trade debt, Cellco Partnerships d/b/a Verizon Wireless with $2.85 million of trade debt, Federal Express with $1.48 million of trade debt, National Distribution Inc. of Brooklyn, N.Y., with $1.36 million of trade debt and MagicJack LP of West Palm Beach, Fla. With $1.34 million of trade debt. Jana Freundlich of Fort Worth, Texas is owed a $1.31 million supplemental executive retirement plan obligation, Maker Media Inc. of Sebastopol, Calif., has a $1.26 million trade debt claim, and the 10 biggest unsecured creditors are rounded out by Dongguan Tecyea Electronics Ltd. of Dongguan, China, with a $1.25 million trade debt claim.

The DIP facility includes a roll up of the company’s prepetition revolver, letters of credit and FILO facility and will also provide up to $20 million of incremental borrowing capacity.

RadioShack’s legal adviser is Jones Day, its investment banker is Lazard Freres, and its financial advisers are Maeva Group and FTI.

RadioShack is a Fort Worth, Texas technology retailer. Its Chapter 11 case number is 15-10197.

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