Fort Worth-based RadioShack was close to an agreement with creditors and other parties late Wednesday that would put the ailing retailer into bankruptcy, people with knowledge of the discussions said.
As part of the deal, RadioShack would sell leases on up to 2,000 stores to Sprint Corp. and Standard General, its largest shareholder, according to the sources, who asked not to be identified because the talks are private. The Wall Street Journal reported that the stores would retain the RadioShack brand along with Sprint’s.
The rest of the electronics chain’s more than 4,000 U.S. locations are expected to be closed, Bloomberg News reported. The filing could be delayed as the parties hammer out final details.
The bankruptcy would cap an almost-century-long history of selling gadgets and gizmos to America. RadioShack traces its roots to 1921, when it began as a mail-order retailer for ham-radio operators and maritime communications officers in Boston. It moved to Fort Worth in 1963 after being acquired by Tandy Corp., which built it into a nationwide consumer electronics chain for hard-to-find parts and other technology.
Digital Access For Only $0.99
For the most comprehensive local coverage, subscribe today.
But in the past decade, competitors such as Wal-Mart, Best Buy and Amazon.com have picked off customers. The company has lost money for 11 straight quarters.
The bankruptcy deal would not preclude other bidders from taking over some of the store leases. Amazon.com has held discussions about acquiring RadioShack locations as part of a push into traditional retail, people familiar with the matter said this week.
RadioShack spokeswoman Merianne Roth declined to comment. The company says it has 27,000 employees nationwide, including about 800 at its Fort Worth headquarters.
Under the terms being completed with creditors, a group of hedge funds and other lenders involved in $535 million in rescue financing in October has agreed to lend the company more money to operate in bankruptcy, the people said.
The latest funding will refinance the balance of the group’s loan and give RadioShack less than $50 million of new money, they said.
The bankruptcy lenders would include hedge-fund firms BlueCrest Capital Management, DW Partners, Mudrick Capital Management and Saba Capital Management, the people said. Representatives of the firms either declined to comment or didn’t immediately respond to telephone and email messages.
Standard General arranged the emergency financing last year to help the retailer survive through the holiday shopping season. RadioShack has struggled with an industrywide slump in demand for consumer electronics. To make matters worse, it has relied heavily on sales of mobile phones, a saturated market with low margins.
Since joining the company as CEO in February 2013, Joseph Magnacca has tried to retool the chain with new store designs and products. But sales continued to decline.
A plan to shutter 1,100 underperforming stores failed last year when lenders including Salus Capital Partners blocked the move, allowing RadioShack to close no more than a couple of hundred. That left the company on course for a cash crunch in 2015, Moody’s Investors Service warned in July.
Salus later accused the retailer of breaching the terms of a $250 million loan from it and Cerberus Capital Management by accepting the October bailout. RadioShack has denied any breach.
For Sprint, acquiring RadioShack stores would potentially align with CEO Marcelo Claure’s turnaround plan, which hinges on reversing the loss of customers and avoiding a drop to fourth place among U.S. wireless carriers.
Sprint has too few of its own branded outposts and has relied on third-party retailers to drive customer sign-ups and sell phones.