McSTREAMY.COM (02/08/2015) – RadioShack, the consumer electronics chain, once looked to as a model for retail success, is selling 1500 to 2400 stores to General Wireless Inc.. The remaining stores are heading to the chopping block, because the purchase agreement does not include all existing stores.
RadioShack has signed an asset purchase agreement with General Wireless Inc., an affiliate of Standard General L.P. (“Standard General”). General Wireless has agreed to acquire between 1,500 and 2,400 of RadioShack’s U.S. Company-owned stores.
To effectuate this transaction and an orderly sale of the Company’s remaining assets, RadioShack and certain of its U.S. subsidiaries have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
As part of this process, other parties will have an opportunity to submit offers for RadioShack’s assets in a court-approved process. The sale agreement is subject to court approval and other conditions. RadioShack’s foreign subsidiaries and its franchisee-owned stores are not included in the filing.
General Wireless, the entity formed to acquire the stores under the asset purchase agreement, has agreed in principle on terms with Sprint to establish a new dedicated mobility “store within a store” retail presence in up to 1,750 of the acquired stores. This agreement-in-principle is subject to negotiation of definitive documentation as well as court approval.
In addition, the Company has filed a motion with the Court to proceed with the closure of the remaining company-owned stores under an agreement with Hilco Merchant Resources. A list of the stores slated for closure will be posted in the near future on the restructuring information section of the company’s web site (see link at bottom of this store). Stores that are closing are expected to sell remaining inventory.
RadioShack currently has approximately 4,000 company owned stores in the U.S. Its 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 announced today.
Discussions are underway with interested parties to sell all of the company’s remaining assets.
Joe Magnacca left Walgreen’s in 2013 to become RadioShack CEO
“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.
The Company has also secured a commitment for approximately $285 million in debtor-in-possession financing (DIP) from its current ABL lender group, led by DW Partners, LP. The DIP is intended to provide it with liquidity during the sale process.
The DIP funding includes a roll up of the Company’s prepetition revolver, letters of credit, and FILO facility. In addition, the facility will provide up to $20 million in incremental borrowing capacity.
Pursuant to the auction process the Company has filed for approval by the Court, all qualifying parties will have an opportunity to submit offers for evaluation through a Court-supervised competitive bidding process.
Any sale will be subject to Court approval and other closing conditions. There can be no assurance that a sale will be consummated at the conclusion of this process.
Joseph C. Magnacca left the Walgreen Company in 2013 to become chief executive of RadioShack Corp., only a week after getting a promotion at Walgreen.
Magnacca, who was Walgreen’s president of daily living products and solutions and head of the company’s Duane Reade drugstore chain, was promoted to Walgreen’s executive vice president from senior vice president the week before it was announced that Magnacca would be going to RadioShack.
In his role at Deerfield-based Walgreen, Magnacca, 50, oversaw the company’s marketing and merchandising operations across more than 8,000 stores. Magnacca joined New York-based Duane Reade in 2008 as chief merchandising officer and was later promoted to executive vice president and then president after the chain was bought by Walgreen in 2010. He was named Walgreens president of daily living products and solutions in 2011 and was credited with helping Walgreen expand products and redesign itself beyond a traditional drugstore.
Electronics retailer RadioShack was hoping he would bring the same success to its chain of 4,700 stores as it struggled at the time with losses and recent departures of top management. RadioShack’s previous CEO, Jim Gooch, left the company in late September, 2013, while Chief Marketing Executive Lee Applbaum left in March, 2013, and Chief Merchandise Officer Scott E. Young resigned in June, 2013. Chief Financial Officer Dorvin Lively was interim CEO since Gooch’s departure.
“I see advantages in being a small box retailer in the consumer electronics space today, particularly with the broad retail footprint and convenience RadioShack offers its customers,” said Magnacca.
Apparently, Magnacca’s hopes did not turn the RadioShack Corporation around. The company’s troubles continued, until the more recent part of the story developed into what it is today.
For a PDF listing of potential Radio Shack stores expected in the roll back of stores currently open: RADIOSHACK ROLL BACK LIST.
