What’s in a battered brand name? If it’s RadioShack, the answer is at least $20 million.
RadioShack’s largest shareholder agreed to bid $20 million for the defunct retailer’s name and other intellectual property in bankruptcy court on Wednesday.
The shareholder, hedge fund Standard General, currently owns about 10% of RadioShack and also wants to acquire some of the company’s store leases, which will be sold separately from the brand name itself.
Other companies will have the chance to bid for the RadioShack name before an auction slated for March 23.
About 2,000 of the retailer’s stores will be sold separately at the same auction, and Standard General has made an initial bid of $200 million. The hedge fund plans to keep about half of those stores open and co-brand them with wireless provider Sprint. The court approved a financing plan that will let the hedge fund make its bid using millions in debt from the dying chain.
A committee of unsecured creditors had expressed concern that Standard General was taking advantage of its stake in the company to secure an unfair advantage in the rushed auction process. So Standard General agreed to slow down and set the auction for the end of March.
“Everybody is moving really fast,” said Greg Gordon, a lawyer for RadioShack from Jones Day. “The company is losing money every day, and every day that goes by is more value that’s lost.”
Another group of about 1,100 underperforming stores that are set to close were also auctioned on Wednesday. GameStop has expressed interest in some of those locations, RadioShack lawyers said. About 200 leases received bids on Wednesday.
“Some of those leases connected to closing stores still have value,” said Gordon. “If those leases are sold, that’s additional funds coming into the [company’s] estate, if not, they’re just rejected.”
Gordon said he doesn’t know just how much the RadioShack name will sell for.
“Somebody is willing to pay $20 million for it,” he said. “The auction will determine its value.”
And the name still does hold a great deal of value, despite the fact that the bankrupt company has been troubled for years, according to Bill Samuels, an intellectual property lawyer at W.R. Samuels Law.
“When somebody says ‘RadioShack,’ you certainly know what they’re talking about,” he said. “People will continue to discuss it, even if it’s a completely different business.”
Purchasing the name could save a buyer the time and money it would take to build their own brand identification, Samuels added. After more than 90 years in business, that name remains powerful.
