Radio Shack has announced that it is selling a significant portion of the company to shareholders for $120 million, the Dallas News reports.
"We are pleased to complete this important step," Radio Shack CEO Joe Magnacca said, according to the site.
"We recognize that we will need to address constraints under our existing term loan in order to undertake a store base consolidation program and pursue other measures to reduce our cost structure. We look forward to continuing to serve our customers with differentiated products and an upgraded shopping experience as we move into the holiday season."
The news comes just months after the company announced that it may have to file for bankruptcy due to financial issues. Analysts suggest the company may get broken down into smaller subsidies and sold. They have also suggested the shareholder sale functions as a temporary "lifeline" for the group.
Radio Shack, which currently bears $658 million in debt, will receive the $120 million from Standard General LP and Litespeed Management LLC with the intention of future convergence into equity, the Dallas News also reports.
"Bankruptcy isn't inevitable, but if it happens, the company's outdated marketing strategy will be to blame, not its business plan," financial analyst Jonathan Salem Baskin writes in a Forbes review of the announcement.
"The challenge isn't to translate the brand positioning into some throwaway creative, but rather look inward, at the operations of the business itself, to create and deliver unique and authentic benefits for its customers. Though the millions blown on an entertaining commercial and overly-complicated branding are lost, perhaps there's still time for Radio Shack to do real game-changer things..." he later writes.
Radio Shack has not made any announcements surrounding its specific plans for the future.
