By Peg Brickley
Hedge fund Standard General LP has offered $20 million for
rights to the RadioShack name, adding to its offer to buy 1,700 or
more of the troubled retailer's stores.
RadioShack Corp. lawyer Gregory Gordon announced the enhanced
offer Wednesday at a bankruptcy-court hearing where Standard
General, a big shareholder and lender, is trying to win approval to
lead the bidding at a March 23 auction.
Creditors have cast a wary eye at Standard General's bid for
part of the RadioShack business, in part because the hedge fund
said it would keep the business in operation but didn't propose to
buy the name and trademarks.
Standard General has a deal to offer co-branded stores with
Sprint Corp., but creditors wondered what brand would share with
Sprint if the RadioShack name wasn't part of the deal.
Lenders Cerberus Capital Management and Salus Capital Partners,
which aren't part of the same lending group as Standard General,
have prime claim on the RadioShack brand. They are owed,
collectively, $250 million.
Mr. Gordon spoke at the start of the hearing, where suppliers,
bondholders and landlords are contesting Standard General's offer
to lead the bidding at an auction, as well as a $285 million
bankruptcy loan.
In advance of Wednesday's hearing, RadioShack and Standard
General made concessions in an effort to appease creditors,
including making an offer for the RadioShack name and pushing back
the timing of the sale. There is still no set dollar amount on
Standard General's proposed lead bid. The offer for the iconic
RadioShack name and trademarks is a separate proposal.
RadioShack says it must either sell or close all of its 4,000
outlets by the end of March. Creditor lawyer Susheel Kirpalani said
the creditors understand that need, but feel the reason for the
race to shut down or sell raises "red flags" that require
investigation. According to the creditor attorney, there isn't
enough left on the shelves at RadioShack to justify keeping the
stores open after the end of March.
"There's not enough inventory to go beyond that," Mr. Kirpalani
said. Creditors have called for a probe into the financing and
other dealings that preceded RadioShack's Feb. 5 bankruptcy filing,
raising suspicions that lenders steered the company into a
bankruptcy timed to their advantage.
For more than a year, RadioShack took on more top-ranking debt
as it tried to mount a turnaround effort. The effort was hampered
by alleged lender refusal to grant permission to close more than a
few hundred stores, and ineffective retailing.
RadioShack has said it can stand up to the creditor questioning
but needs to move quickly to get the most value out of the
business.
Write to Peg Brickley at peg.brickley@wsj.com
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