RadioShack’s Last Day Could Be Its First

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As I stated in my last post, I sold my entire stake in RadioShack a couple weeks back. But that doesn’t mean I’m ignoring the company. The recent deal with Standard General and Litespeed Management has me pretty intrigued.

I know that RadioShack has inked refinancing deals before, but this one is a bit different. If certain contingencies are met, this deal will give Standard General and Litespeed Management a majority stake in the company, allowing them the revamp the entire board of directors. Hopefully with a new board comes new ideas, new directions, and new life. As always, only time will tell, though. RadioShack still needs to make it through the holiday season with over $100 million in liquidity (along with a renegotiated supplier contract and a viable year-long business plan) before any of this can come to fruition.

Additionally, the deal requires RadioShack to issue 300,000,000 shares to the public with a $0.40 price tag. I’m hoping to see RadioShack reach a new group of investors with this offering. Because in order to attract a new crop of investors, RadioShack will need an absolutely rock-solid plan for the future. If Standard General ends-up buying all of these public shares, it will signify (to me) that RadioShack’s plan just isn’t good enough.

With so many new common shares potentially hitting the market, RadioShack is virtually starting an entirely new company (from a public-equity perspective). If Joe Magnacca’s turnaround plan slows their cash-burn enough for a revamped board of directors to come aboard, the company’s potential is enormous. It could really be day one for RadioShack. With new people and new ideas, a new RadioShack has the potential to innovate on a grand scale. How often is a ‘new’ company able to reach over 3,000 retail locations worldwide on their first day?

I’m eager to see how these next few months play out. In the mean time, I imagine this stock will become a nice toy for day and swing traders.

One thought on “RadioShack’s Last Day Could Be Its First

  1. I agree with you!! I think a $40 million valuation on RadioShack is a steal… If they close those 1,100 stores and survive this tough time, we are holding onto a monster that just might wake up :). With 5,000 locations and close to 3 billion in revenue, you just can’t buy that for 40 million anywhere else. Maybe, just maybe this dog will hunt. Good Luck James. I love the blog.

    Not scared :). Boldly buying where others are fearful….

    I’m also cheering for GT Advanced Technologies

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