As RadioShack continues to close locations and move forward with a plan to sell half its stores to a hedge fund, it issued a warning to investors Thursday.
The company’s stock will be worthless.
In a statement, the Fort Worth-based company reiterated its belief that nothing will be left for shareholders after creditors recover what they can during bankruptcy.
RadioShack “believes that the claims of its secured and unsecured creditors will not be fully satisfied, leading to the conclusion that RadioShack common stock has no value,” the company said.
Shares of the bankrupt retailer have continued to trade on the over-the-counter market since falling off the New York Stock Exchange in early February. The company’s shares (ticker: RSHCQ) traded for 18 cents on Thursday.
RadioShack listed assets of $1.2 billion and debt of $1.39 billion in its Chapter 11 petition filed in Wilmington, Del., on Feb. 5. Liabilities include $250 million to Standard General on an asset-backed loan, while Salus Capital Partners and affiliate Cerberus Capital Management are owed $250 million on a second-lien term loan.
Standard General, which was also one of RadioShack’s top shareholders, has proposed buying about half the company’s 4,000 stores and has lined up a deal with Sprint for the wireless carrier to take space in many of them. The stores would be co-branded under the two names. Its opening bid has been estimated at $200 million.
U.S. Bankruptcy Judge Brendan Shannon has set an auction date of March 23 if competing bids emerge for the assets.
Separately, RadioShack is closing hundreds of stores. This week, the Bankruptcy Court approved the auction of 170 store leases March 23 so the company can avoid paying rent in April.
Bids for the leases are due Tuesday, and a hearing to approve results of the auction will take place March 26.
This will be the second set of leases the retailer is putting up for auction. Last month, it generated $2.6 million from the potential sale of 163 leases to Grapevine-based GameStop, which plans to convert most of the locations into Spring Mobile AT&T Wireless stores.
RadioShack also accepted bids to sell six other leases and negotiated 37 lease terminations with landlords.
To avoid rent, which must be paid in full after bankruptcy, RadioShack is terminating leases on stores that aren’t sold to third parties or that won’t be acquired in a separate sale by Standard General or another buyer.
Staff writer Steve Kaskovich contributed to this report, which includes material from Bloomberg News.