Standard General is in talks to serve as the lead bidder at a bankruptcy auction for RadioShack (NYSE:RSH), according to people familiar with the sources.
After 11 straight quarters of losses, RadioShack plans to file for Chapter 11 bankruptcy protection, but is still working out the details of the agreement, reported the Wall Street Journal.
This announcement comes just weeks after it was reported that the company was preparing to file for Chapter 7 bankruptcy protection, according to people familiar with the matter.
Last year, Standard General became the retailer's largest shareholder. However, Standard General is not the only stakeholder trying to gain more control of the floundering retailer.
In January, RadioShack received an unsolicited $500 million loan offer from Salus Capital, if the company agreed to file for bankruptcy. If the loan was accepted, it would replace the retailer's existing $585 million asset-backed credit line. To further its stake in RadioShack, Salus also recently accused the retailer of breached covenants on a $250 million term loan, though RadioShack contested the claims. Salus Capital is attempting to get a bigger piece of the retailer's debt in exchange for agreeing to back the company's store-closing plan.
It is possible that Standard General will only bid on RadioShack if it divests stores. Workers at several RadioShack stores have reported authorization to clear out inventory and have shipped smartphones to nearby stores.
RadioShack currently has 4,300 stores in the United States and will need to close many of them to complete the deal. There is talk that Sprint might be interested in buying leases on some of RadioShack's locations.
-See this Wall Street Journal article
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