June 21, 2013
USA Today reports that Kodak could be close to breaking out of its 17-month bankruptcy if the US Bankruptcy Court allows it to sell its Personalised Imaging and Document Imaging businesses to the UK pension plan, which represents around 1,000 Kodak Ltd. employees and almost 14,000 retirees and other beneficiaries.
The sale would settle one of the company’s largest debts – a $2.8 billion (€2.1 billion) claim by the unfunded pension plan – with The Recycler reporting in May that Kodak plans to sell the businesses for a sum of $650 million (€498.5 million) after terminating an agreement to sell the businesses to Brother.
Kodak is also set to seek court approval next week for its disclosure statement, a document that explains how the company intends to pay back its unsecured creditors. The creditors must approve Kodak’s reorganisation plan before the company is able to exit bankruptcy.
According to Kodak spokesman Christopher Veronda, the OEM hopes to finalise the pension plan deal during the third quarter of this year, with the deal meaning that Kodak would “continue to supply the pension plan with supplies and services needed to run the Personalised Imaging and Document Imaging businesses, including consumer and professional films and related materials”. In turn, the pension plan would take over Kodak’s photo paper manufacturing facility, based in Harrow, England, along with the million-square foot Building 205 in Eastman Business Park.
In order to raise even more money, Kodak is also reportedly planning to raise $406 million (€307 million) to help pay off second lien creditors by offering 34 million shares of stock at $11.94 (€9.03) each to its unsecured creditors. The buyers of the shares would end up owning 85 percent of Kodak, with the remaining 15 percent being kept in reserve by the company. These reportedly include GSO Capital Partners, BlueMountain Capital, Goerge Karfunkel, United Equities Group and Contrarian Capital; who will have a say in Kodak’s future operations and will be collectively allowed to select six of the nine Kodak board members following the company’s emergence from bankruptcy.
Furthermore, Kodak has secured up to $895 million (€677 million) to fund its post-bankruptcy operations, repay loans that funded operations while under bankruptcy and finance its exit from Chapter 11 bankruptcy; with J.P. Morgan, Bank of America Merrill Lynch and Barclays supplying loans of up to $695 million (€525.6 million) and affiliates of these lenders establishing an “asset-based revolving credit facility of $200 million (€151 million)”.
Categories : Products and Technology