RadioShack files for bankruptcy

After weeks of post-holiday rumors and 11 straight quarters of losses, RadioShack (NYSE:RSH) has officially filed for Chapter 11 bankruptcy protection. The 94-year-old consumer electronics retailer could no longer stave off competition from big-box stores and e-commerce giants.

The retailer has struck up an agreement with creditors which includes selling between 1,500 and 2,400 of its stores to a unit of Standard General, its largest shareholder. Standard General has in turn brokered a deal with Sprint that will allow Sprint to operate a store-within-store model, preserving the RadioShack brand within up to 1,750 of the acquired locations, reported Bloomberg. The new partners in this deal come as no surprise, as Standard General was rumored to be the lead bidder a few days ago. And just last month Sprint revealed that it was interested in purchasing between 1,300 and 2,000 RadioShack locations.

The bankruptcy deal does not keep another bidder from stepping in to acquire what remains of the 4,000 RadioShack locations. One of the interested parties could be Amazon, which was in talks with RadioShack earlier this week about buying up leases as it looks to expand its physical presence. Amazon has shown interest in using the physical space to display hardware such as tablets, e-readers, smartphones, etc. or as potential pick-up and drop-off centers for online shoppers.

The terms of the bankruptcy include a $535 million rescue financing package that hedge funds and other lenders agreed to back in October. The latest funding will refinance the balance of the group's loan, giving RadioShack less than $50 million.

Standard General gave RadioShack emergency financing last year to help them through the holiday season.

And the company did attempt a turnaround plan, which included shuttering 1,100 underperforming stores, but the plan was blocked by Salus Capital, allowing them to close no more than a couple hundred. Salus later accused RadioShack of breaching the terms of the $250 million term loan, but the company denied the breach.

The bankruptcy lenders include BlueCrest Capital Management, DW Partners LP, Mudrick Capital Management and Saba Capital Management.

The electronics retailer first opened for business in 1921 as a mail-order retailer for ham-radio operators and maritime communications officers in Boston. It eventually became a niche retailer in the electronics industry.

In more recent years, RadioShack could not compete with big box stores such as Walmart and Amazon.

For more:
-See this Bloomberg article
-See this Bloomberg article

Related stories:
RadioShack preparing to file for Chapter 7
RadioShack seeks funding; makes turnaround effort
RadioShack defends its balance sheet, discourages implications that it's for sale
Staples and RadioShack pull Amazon lockers from stores
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