Friday, September 26, 2014

Standard General Files Radio Shack Schedule 13D $RSH

This was filed today by hedge fund "Standard General",

This Schedule 13D is being filed on behalf of (i) Standard General L.P., a Delaware limited partnership (“Standard General”); (ii) Standard General Master Fund L.P., a Cayman Islands limited partnership (the “Master Fund”); (iii) Standard General OC Master Fund L.P., a Cayman Islands limited partnership (the “OC Master Fund”); (iv) P Standard General Ltd., a British Virgin Islands business company (“P Standard General”); (v) Standard General Focus Fund L.P., a Delaware limited partnership (the “Standard Focus Fund” and, together with the Master Fund, the OC Master Fund and P Standard General, the “Funds”); and (vi) Soohyung Kim (“Mr. Kim”), a director of the general partner of the general partner of Standard General. The persons and entities referred to in items (i)-(vi) hereof may be collectively referred to herein as the “Reporting Persons.” [...]

Standard General has been in discussions with the Company regarding a proposal on a business operating plan and certain ways to improve the Company’s liquidity position in advance of the holiday shopping season. Proposals under discussion include Standard General and certain other investors (the “New Investors”) purchasing loans and other commitments under the Company’s asset backed credit facility (the “Credit Facility”) from its existing lenders. Under such a proposed transaction, Standard General and certain other New Investors may propose to subordinate their investment in the Credit Facility to other investors in order to improve the near-term liquidity available to fund the Company’s holiday working capital needs. Pursuant to such a proposal, the investment by the New Investors could be the first step of a broader recapitalization of RadioShack proposed to be completed by early 2015, which may include Standard General and certain other New Investors acquiring preferred equity convertible into common equity, board nomination rights and corresponding changes to the Company’s structure. The New Investors have provided draft financing commitments to the Company to fund such a transaction. Discussions are ongoing among the Company, the New Investors, and the existing lenders under the Credit Facility. No assurances can be given that the proposed transaction will occur, or in the form currently under discussion.

The Reporting Persons reserve the right to change their purpose and to formulate and implement plans or proposals with respect to the Company at any time and from time to time. Any such action may be made by the Reporting Persons alone or in conjunction with other shareholders, potential acquirers, financing sources and/or other third parties and could include one or more purposes, plans or proposals that relate to or would result in actions required to be reported herein in accordance with Item 4 of Schedule 13D.

The Reporting Persons hold options to acquire an aggregate of 3,000,000 shares of Common Stock at a price of $1.50 per share, which options expire in January 2016. Standard General has entered into a confidentiality and standstill agreement with the Company. Pursuant to this agreement, Standard General has agreed that until June 12, 2015, neither it nor its affiliates will propose (except in the context of consensual negotiations) any acquisition, restructuring, recapitalization or certain other transactions relating to the Company or its affiliates, or engage in certain other activities relating to an effort to obtain control of or influence over the Company’s management, Board of Directors or policies.


Anonymous said...

Sounds they like got the money.

Anonymous said...

SG likely sold cds on rsh bonds to fund a revival.

Anonymous said...

Bonds trading higher on the news..

Anonymous said...

Wouldn't Salus and others have to approve the plan?

Anonymous said...

SG might be low balling Salus + Cerberus and threating chpt 11 if they do not go along with the plan.

From the PR: $RSH is in "discussions with our term lenders, led by Salus Capital, toward additional steps to recapitalize RadioShack."

The willingness to restructure the second-lien term loan might hinge on whether suppliers modify contracts, a rights offering can be carried out before a potential ABL refinancing by the end of Q1 2015, all while freeing up liquidity to try to curtail cash burn in 2015 and 2016.

It seems to me that all of the above will be a stretch and $RSH won't complete a restructuring out of court.