RadioShack share price down, faces extinction ahead of bankruptcy auction

All of RadioShack Corps stores may be closed down for good after Mondays bankruptcy auction if Standard General LP does not prevail in the bid war.

The hedge fund, which is also a creditor of the electronics company, is the only interested party that does not intend to completely shut down RadioShack if it gets ownership.

Following Februarys bankruptcy filling, the companys assets will go on a action in New York later today. Standard General, also a large shareholder, will have to fend off liquidation companies in order to move forward with its plan to save 1 723 of the retailers stores.

Standard General reached an agreement with Sprint, the third-largest wireless network operator in the U.S., and offered $145.5 million for the remaining assets of the retailer. RadioShack has been aggressively closing down stores and with the help of liquidation firms has reduced its 4 000 stores to nearly half.

Standard Generals initial offer valued the remains of the company at $200 million, but the hedge fund lowered the bid after it agreed to save around 9 000 jobs at RadioShack.

In line with the agreement with Sprint, the RadioShack facilities that remain open would be operated as a co-branded stores. Standard General said that the move would benefit the retailer as it would get increased customer traffic.

Additionally, Standard General offered $20 million for rights of the RadioShack name. The hedge fund has been backing the struggling retailer despite pressure from other lenders. Standard General provided a $120-million rescue package last year.

However, the proposed bid is well below the retailers overall debt, which also includes around $500 million owed to unsecured creditors.

Additionally, Standard Generals offer include only $18.6 million in cash, while the rest of the amount would be in the form of a “credit bid”, or canceling the debt that RadioShack owes the hedge fund.

However, other lenders have voiced concerns and objections about the current structure of the proposed deal. Additionally, Standard Generals offer is not guaranteed to win as creditors would almost always prefer a significantly higher cash offer from a liquidation company, which would mean the end of RadioShack.

“We really believe that there is a viable strong core retail business when we partner with Sprint to take care of the mobility portion,” Standard General partner David Glazek said, cited by the Wall Street Journal.

RadioShack dropped 9.63% on Friday and closed at $0.136, marking a one-year decrease of 93.87%. The company is valued at $13.70 million.