The New York Post reported RadioShack is filing for bankruptcy, closing half its stores and teaming up with Sprint to keep the remaining stores open. Um, a partnership between RadioShack and Sprint is like a Republican presidential ticket featuring Mitt Romney and Sarah Palin. Or a Dumb and Dumber sequel. Or the next Draftfcb. Or a Frobinson and Shirato family reunion. Hell, the comparisons could go on forever.
RadioShack ‘Sprints’ toward bankruptcy
By James Covert
RadioShack is finally about to blow its fuse.
The flailing electronics chain is nearing a bankruptcy filing — perhaps as soon as this week — that will close nearly half its stores while keeping the rest open in a partnership with telecom giant Sprint, sources told The Post.
The Chapter 11 filing is expected to be packaged with an agreement for Sprint to take over the leases of between 1,800 and 1,900 locations, according to sources — less than half of the more than 4,000 currently in operation.
Under terms recently being negotiated, those locations would be dual-branded under both the Sprint and RadioShack names, according to a source briefed on the discussions.
The rest of the 94-year-old retailer’s locations will be shuttered — with the exception of between 200 and 400 stores, according to a source. Those will be kept open as standalone RadioShack stores, although they won’t sell mobile phones and contracts.
Under the terms of the bankruptcy, Sprint’s proposal will likely take the form of a “stalking horse” bid for the chain, with rivals getting the chance to submit offers, sources said.
RadioShack is meanwhile expected to get $275 million in debtor-in-possession financing, consisting of $25 million in new funds plus the company’s existing $250 million in first-lien debt, according to a source.
“RadioShack’s not going away, it’s going to be shrunk,” according to one insider. “The idea is to bring RadioShack back to where it was 15 or 20 years ago and just sell electronics.”
RadioShack has taken a beating from brutal competition in the wireless market. In addition to big-box retailers like Best Buy and Walmart, RadioShack has been pummeled by the rapid retail expansion of wireless carriers like Verizon, AT&T and Sprint.
Last month, Sprint CEO Marcelo Claure signaled 2015 “is a year in which we intend to grow our distribution dramatically.” Claure said, “You are going to see the opening of more and more Sprint stores as this is one area that we work on.”