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Kodak Australia dodges bankruptcy bullet

Friday, 20 January 2012
By Print 21 Online Article

Kodak’s Australian operations have escaped any immediate ill effects stemming from the company’s decision to file for bankruptcy in the US this week.

The local company, along with Kodak’s other international subsidiaries will not be subject to the bankruptcy proceedings. The company says its international subsidiaries will continue to honour all obligations to suppliers.

The iconic photo company filed for voluntary bankruptcy in its home country to get sufficient cash to allow it to focus on growth areas, and fund a drive through the courts to claw back its intellectual property rights through litigation. It expects to be under Chapter 11 until 2013

In a video released to assuage investors’ fears, Kodak’s president and COO, Phil Faraci, said that, “the process will allow us to…fully enforce our Kodak intellectual property rights against industry players that have infringed against our patents.

“We’re taking this action to bolster our liquidity in the US and abroad, monetize our non-strategic intellectual property, to fairly resolve some legacy liabilities, and to enable the company to focus on our most valuable business lines as we go forward,” he said.

Under the voluntary bankruptcy, Kodak gets a (US) $950 million debtor-in-possession credit facility with an 18-month maturity period from Citigroup for working capital. The company says it has made pioneering investments in digital and materials deposition technologies in recent years, generating around 75 per cent of its revenue from digital businesses in 2011. The bankruptcy proceedings are expected to help Kodak secure the financial resources to increase and develop this side of its business.

Kodak’s chairman and CEO, Antonio M. Perez, said that filing for bankruptcy gives the company the best opportunities to maximise its value in two critical parts of its technology portfolio: digital capture patents, and printing and deposition technologies, which he believes will give Kodak a competitive advantage in its growing digital businesses.

“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Perez. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets.”

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