Saturday, January 31, 2015

RadioShack Reorg Watch $RSH

A correspondent writes,

Lots of reports of stores closing or in final liquidation mode from around the country. From the comments below it sounds like they are going to close their mall based stores primarily – that is consistent with some of the other stories that have been popping up. They are definitely gearing up for a large reset of the store base and soon. No inventory in a lot of these stores.
** The two young folks that were working told me that this store wasn't closing. Mostly stores located in malls were closing because the rents are higher there. They told me something like 1100 stores would be shut down.

** They also said the bankruptcy was going to be a re-organization (Chapter 11?)
I think the rumor of a Feb filing makes the most sense. Probably some kind of a prepack involving Salus on the DIP or we would have heard more saber rattling from Salus I expect. It’s the start of a new year so they can go ahead and close another 200 and it doesn’t sound like they made it to 200 last year, so maybe there are some that carry over. I suspect they have a meeting of the minds with Salus and probably SG to file, close a lot of stores and give them enough liquidity to last a year or two. Hope so, would be nice to have a second shot at this one in Chap 22.

[Noteholders will probably not do well.] I’d guess less than 5% of the equity or maybe warrants. I’m assuming that Salus’ current loan doesn’t pay out at par, so the Notes are just going to get paid a nuisance claim, I’d guess. The market value of the notes is $30-35MM, so they aren’t going to get much.
We went to check on our nearest RadioShack (only 2 miles away, naturally) and found that it is... closed.

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