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Kodak secures $895m for creditor payback

Friday, 21 June 2013
By Print 21 Online Article
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Kodak is readying to pay back its creditors when it emerges from Chapter 11 bankruptcy in the US following a deal with its financial backers that sees it receive debt financing of US$895 million with which to repay its outstanding debts to secured creditors.

The company, which entered Chapter 11 bankruptcy in the US in January 2012, announced on 20 June that it had reached a debt financing deal to be arranged by J.P. Morgan, Bank of America Merrill Lynch, and Barclays to arrange new post-emergence credit facilities of up to $895 million.

In a statement, Kodak said:

This comprehensive financing package will enable Kodak, at emergence, to repay its secured creditors under the current senior and junior Debtor-in-Possession loan facilities, finance its exit from Chapter 11, and meet the company’s post-emergence working capital and liquidity needs.

The proposed term loan financing is expected to provide the company with more favorable terms compared to the existing rollover exit financing commitment.”

Antonio M. Perez (pictured), Kodak’s chairman and chief executive officer, said: “the new financing, combined with other recent significant milestones in our restructuring – including the rights offering, Amended Plan of Reorganization, and Eastman Business Park settlement – will position Kodak for a bright long-term future.”

The financing agreements are subject to conditions, including, among others, approval by the Bankruptcy Court, completion of definitive financing documentation, and a successful syndication in the loan markets.

On 18 June, the graphic arts company said its key creditors agreed to backstop a $406 million rights offering for common stock in the company upon its emergence from Chapter 11 bankruptcy.

Kodak said it expected to use the proceeds of the rights offering to fund distributions under its revised ‘Plan of Reorganization’, including the repayment of its second lien creditors, who will no longer receive equity in the Plan.

Kodak said the proposed rights offering permits it to offer its creditors up to 34,000,000 shares of common stock for the per share purchase price of $11.94, equivalent to approximately 85 per cent of the equity of Kodak upon emergence.

“Attracting this additional funding is a strong vote of confidence in both Kodak’s Plan of Reorganization and in the actions we have taken during our restructuring to create a solid future for our company,” said Perez. “This agreement, which serves as a critical component of the capital structure for the emerging Kodak, positions us to comprehensively settle our obligations with our various key creditor constituencies.”

In May, Kodak said it expected to emerge from Chapter 11 Bankruptcy by September this year, after reporting a consolidated profit of (US)$283 million for the first quarter of 2013, a figure, which stood in stark contrast to the $-366 million loss it recorded for the same period last year.

When Kodak does eventually emerge from bankruptcy, it will be a very different beast from the globally-recognised multinational leviathan it was prior to its filing for bankruptcy last year.

Not only is the company now a much smaller operation than before, it will be primarily focused on its commercial print technology, severing most of its ties with the product range that made it famous, including film, cameras and other personal imaging technology.

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