RadioShack could get the cash infusion it needs from its major investor. NEW YORK (CNNMoney)
The troubled electronics retailer is in talks with Standard General, which holds nearly 10% of RadioShack shares, to give it a cash infusion, sources familiar with the talks have told CNN.
RadioShack burned through more than 40% of its cash on hand in its most recent quarter ending in May, leaving with only $62 million on its balance sheet. Credit rating agency Moody's has estimated the retailer could run out of cash as soon as next year.
RadioShack did not have an immediate comment on the talks. Standard General partner David Glazek declined to comment.
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RadioShack management unveiled a plan earlier this year to close about 1,100 stores, roughly 20% of its total, in an effort to stem losses. It also needs cash to revamp its remaining stores. Its own Super Bowl ad mocked its current stores as hopelessly mired in the 1980s.
But creditors balked at the move to close that many stores, leaving the company without the cash it needed for the turnaround plan. It then unveiled a more modest plan to close 200 stores, but that plan raised new worries that it would soon run out of cash.
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Standard General is providing $25 million to help rescue another troubled retailer in which it has taken a large stake - American Apparel (APP), the company that fired its controversial CEO Dov Charney earlier this summer.
RadioShack (RSH) shares fell to a record low of 55 cents earlier this month on bankruptcy fears. But they have rallied since then, jumping nearly 20% in trading Tuesday on initial reports of the rescue talks on Bloomberg. Shares rose another 7% in early trading on Wednesday, although they were still under $1.
First Published: August 27, 2014: 9:50 AM ET
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