Hedge fund said to prevail in RadioShack auction

A hedge fund called Standard General is bidding to buy more than 1,700 RadioShack stores out of bankruptcy.
A hedge fund called Standard General is bidding to buy more than 1,700 RadioShack stores out of bankruptcy. Star-Telegram

Standard General apparently prevailed in a bid for the assets of bankrupt electronics retailer RadioShack Corp. being held in a New York law office, according to people familiar with the situation.

The hedge fund was RadioShack’s largest shareholder and provided a $535 million rescue-financing package to the Fort Worth-based retailer last year. RadioShack subsequently filed for bankruptcy protection in February.

The results of the auction must be approved by the bankruptcy court in Wilmington, Delaware. A hearing on the matter is scheduled for Thursday.

RadioShack entered bankruptcy in February with a plan for a Standard General affiliate to take over as many as half its approximately 4,000 stores in a co-branding arrangement with Sprint Corp.

The final package as announced before the auction began in New York Monday included 1,723 RadioShack store leases, with inventory the retailer valued at $129.8 million. RadioShack says it has already closed about 1,400 stores and plans to close hundreds more by the end of the month.

Standard General’s opening offer was valued at $145.5 million, which included a so-called credit bid of $117.5 million, meaning the buyer would hand over debt in that amount rather than pay cash.

Salus Capital Partners, as agent for some lenders, had asked the bankruptcy court to cap the credit bid at $111 million, which it said was the amount of the loans held by Standard General that have a high enough claim on the retailer’s assets.

The Wall Street Journal reported that Standard General’s bid was worth $20 million more than a counterbid from liquidators, which would shut down the retailer and sell off all assets. But creditors were still haggling over the validity of Standard General’s credit bid, the Journal reported.

Standard General isn’t the only investor with plans to use some of RadioShack’s real estate to sell phone service. Spring Mobile, a unit of Grapevine-based GameStop, won a previous auction for the right to take over about 160 stores. Spring has about two months to decide which of the locations it wants to keep.