RadioShack is reportedly in a negotiation to sell off half of its physical stores to Sprint and maintain the rest. There is also an option to sell all the stores if the electronics retailer can find an interested buyer. Apart from Sprint, Amazon had also shown interest to take over some of the stores.
Last September, RadioShack warned about facing bankruptcy if talks on restructuring with lenders and stakeholders become unsuccessful.
Last month, the company received a warning from the New York Stock Exchange which required them to come up with a business plan in 45 days as part of the exchange's listing standards.
According to the exchange, a company should be able to maintain an average market capitalization worth $50 million for 30 consecutive days in order to remain on its list. RadioShack failed to comply and therefore had to be de-listed. Trading activities of the company would also have to be immediately suspended by the NYSE.
In the meantime, RadioShack is expected to receive a type of debtor-in-possession financing worth $275 million which will be made up of $25 million worth of new funds and $250 million worth of its existing first-lien debt.
"RadioShack's not going away, it's going to be shrunk," said one insider. "The idea is to bring RadioShack back to where it was 15 or 20 years ago and just sell electronics."
RadioShack had its roots back in 1921 when it started out as a mail-order retailer that catered to maritime communications officers and amateur ham-radio operators. Over the decades, the company had seen an expansion into a wider range of electronics. In the 1980s, RadioShack became an ultimate destination of hard to find products such as gadgets, personal computers and other components.
In recent years, RadioShack faced a strong competition from Wal-Mart and a number of e-commerce retailers such as Amazon. Though it has tried to rebrand itself as a more consumer-friendly shop, customer traffic continued to diminish. As a result, the chain decided to close at least 1,100 of its "underperforming stores" in the previous year.
RadioShack and Sprint are said to have talks on co-branding the stores. Under the terms of the negotiation, the stores would be dual-branded in both the names of RadioShack and Sprint. Last month, Sprint CEO Marcelo Claure told investors that the company has intended to add retail locations.
"This is a year in which we intend to grow our distribution dramatically," said Claure. "You are going to see the opening of more and more Sprint stores as this is one area that we work on."
Amazon has considered about using the RadioShack stores as showcase locations for hardware. There's also an option to use them as pickup and drop off centers for their online customers. The move is part of Amazon's push to enter into traditional retail system.
