24/7 Wall St. has seen a recent analyst report calling for the value to go to zero, and even a ratings agency call warned of a liquidity implosion back in May. We have warned over and over about this name, and just last week we warned readers that RadioShack needs to immediately file for bankruptcy protection now while it still has some assets to its name.
RadioShack is in such a unique situation that it is a no-win situation. The company could not even strike a bargain basement buyout in recent years, and the company’s balance sheet is dwindling by the hour.
Creditors did not allow RadioShack to close the 1,100 or so stores that the company wanted to close. What does that tell you? The note holders and creditors almost certainly are looking to make sure they are the only ones with viable claims by the time the bankruptcy arrives.
The company rents its stores, but it owns the distribution and manufacturing facilities. What those will be worth would be a guess without site inspections.
It is even sadder to report that RadioShack is worth less than $100 million now in its equity market cap. The company’s retail network includes roughly 4,250 domestic company-operated stores, another 258 company-operated stores in Mexico and 912 dealers and other outlets worldwide.
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What is sad is that it seems as though RadioShack will not ultimately be a Chapter 11 filing that protects it from creditors, even if the first filing could be for Chapter 11. The endgame here looks as though it will be an outright liquidation.
If this does not seem possible, go ask yourself what ever happened to brands like Circuit City, CompUSA and others.
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