NYSE suspends trading in RadioShack, will delist the stock

Trading in RadioShack stock was suspended late Monday amid reports that the ailing Fort Worth-based consumer electronics retailer is drawing near to filing for bankruptcy.

In a statement, the New York Stock Exchange said it was taking action to delist RadioShack shares from the Big Board because the company “does not intend to submit a business plan to address its noncompliance.” The exchange first warned the company about a possible delisting in July.

Bloomberg News, citing people with knowledge of the discussions, reported that RadioShack is considering a plan to shut down the almost-century-old chain in a bankruptcy deal that would sell up to half its 4,300 stores to Sprint Corp. and close the rest.

The locations sold to Sprint would operate under the wireless carrier’s name, meaning RadioShack would cease to exist as a stand-alone retailer, said the people, who declined to be identified because the talks aren’t public.

Still, Bloomberg reported that the negotiations could break down without a deal being reached or the terms could change. Sprint and RadioShack have also discussed co-branding the stores, according to two of the sources. It’s also possible that another bidder could emerge that would buy RadioShack and keep it operating, the people said.

Chinese backers who took the Brookstone chain out of bankruptcy, Sanpower Group, also have been in discussions about bidding for RadioShack assets, one person familiar with the talks told Bloomberg.

Sprint is discussing the acquisition of 1,300 to 2,000 locations, the people with knowledge of the matter said. In one possible scenario, RadioShack considered keeping the name alive as a store-within-a-store concept involving wireless carriers, two of the people said.

Sprint’s CEO Marcelo Claure told investors at a conference last month that the company would be adding retail locations.

“This 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.”

RadioShack spokeswoman Merianne Roth declined comment on the delisting action and other reports. David Glazek, a partner at Standard General, also declined to comment.

In October, RadioShack received a rescue financing package from Standard General that provided capital to help it get through the holidays. The New York hedge fund, which is a major shareholder in the company, said it would serve as the lead bidder in a bankruptcy auction and provide debtor-in-possession financing, the sources said. That would allow the investment firm to recoup some of the costs of the $535 million loan. Liquidating the stores also would let RadioShack avoid a battle with lenders over control of the company.

The company, under pressure from big-box and online rivals, has been losing money for nearly three years and has warned since September that its cash was running low and that it might have to file for bankruptcy.

In December, the company reported a 16 percent drop in revenues to $650.2 million for its third fiscal quarter, a $161 million loss and said it had launched a new round of cost-cutting and store closures.

RadioShack, which is down to about 800 employees at its Fort Worth headquarters, changed executives in early 2013 in the hopes of turning the company around. But changes in product mix and store layouts led by CEO Joseph Magnacca have failed to turn around slumping sales.

RadioShack shares (ticker: RSH) closed down 4 cents at 24 cents on Monday, before the delisting was announced.

RadioShack, founded in Boston in 1921, has been in Fort Worth since 1963. In 2005, it opened a $200 million corporate campus along the Trinity River in downtown Fort Worth. The company quickly sold the campus to a German real estate firm, which later sold it to the Tarrant County College District. RadioShack continues to lease its space from TCC.

On Monday, The Wall Street Journal reported that RadioShack workers have been told to clear out inventory at many store locations this month in anticipation of store closings. The number of stores to be closed is still under discussion.

Also in December, the retailer said it received a notice from lender Salus Capital Partners, claiming that the refinancing deal with Standard General violated terms of its $250 million loan. RadioShack said it would contest the claim. Salus later offered to provide a $500 million bankruptcy loan to RadioShack.

This article includes material from Bloomberg News and Star-Telegram archives.

This story was originally published February 2, 2015 at 1:25 PM with the headline "NYSE suspends trading in RadioShack, will delist the stock."