The RadioShack business has a new owner. The RadioShack name is
up for sale.
Headed to the bankruptcy auction block in May is the well-known
and occasionally mocked trademark of the electronics retailing
pioneer, as well as the data of millions of customers and contracts
with hundreds of independent dealers strung across small-town
America, who have been selling under the RadioShack name for
decades.
It is all for sale in a bankruptcy that, so far, has only paid
off part of the $1 billion or so in debt that had pushed RadioShack
Corp. into bankruptcy in February.
While much of the business was saved through a takeover by
Standard General LP, the corporate shell of RadioShack left behind
in Chapter 11 is still trying to scrape up more cash for
creditors.
More than half the 4,000 stores are being liquidated, but the
hedge fund rescued over 1,700 stores and is leading a revival of
the retailing operation. Many are flying the flag of Sprint Corp.,
along with the iconic RadioShack name, as Standard General
implements its strategy of streamlining, improving and sharpening
the focus of the product offerings.
Standard General has said its turnaround strategy doesn't hang
on the RadioShack name, but it may make an offer for the brand.
Standard General couldn't immediately be reached Monday to discuss
whether it will bid at the auction.
As part of the takeover, Standard General has the right to use
the RadioShack name for six months. After that, it will have to buy
the brand and other intellectual property, such as the dealership
agreements, if it wants to incorporate them into its business.
Officials at Standard General have said they see great value in the
dealership and franchise operation, a string of 800 or 900 small
businesses established in communities too small to support a
company-owned RadioShack outlet.
A lawyer for RadioShack didn't respond Monday to inquiries about
the intellectual property sale. A bankruptcy judge has to sign off
on rules for the competition, where a May 6 deadline has been set
for the bids. If RadioShack gets more than one offer, there will be
an auction May 11.
The sale to Standard General took care of RadioShack's
top-ranking debt but left little for unsecured creditors, including
landlords and suppliers. Creditor lawyer Jay Indyke said Monday
that RadioShack is starting the process of selling the intellectual
property and isn't sure how it will turn out.
Among those still waiting for payment is second-tier secured
lender Salus Capital Partners, which has first claim on the
intellectual property. Owed $150 million, Salus may get some money
from the sale of the business to Standard General, Mr. Indyke said.
However, a rich price for RadioShack's basket of intellectual
property would go a long way toward satisfying Salus.
RadioShack's customer lists have been a particularly sensitive
spot in the electronics retailer's bankruptcy. Names and addresses
were collected over the years under promises they wouldn't be
rented or sold.
State officials campaigned in court warning they will block
deals that would violate those terms. The customer data was
withdrawn from the March auction. Papers filed Friday with the U.S.
Bankruptcy Court in Wilmington, Del. say RadioShack is working
closely with the Attorney General Ken Paxton, and other regulators
worried about the privacy of RadioShack's customers.
A consumer privacy ombudsman is already in place to make sure
any transaction involving the consumer information complies with
the law.
Write to Peg Brickley at peg.brickley@wsj.com
Access Investor Kit for SoftBank Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3436100006
Access Investor Kit for RadioShack Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7504381036
Subscribe to WSJ: http://online.wsj.com?mod=djnwires