Thursday, June 7, 2012

Kodak Files Chapter 11; Next Stage of Digital ‘Transformation’

Eastman Kodak (EK) has filed for Chapter 11 bankruptcy protection, announcing the development in a press release issued just after midnight, Eastern time.

Kodak has sufficient funds to operate its business during the proceedings it said. It has received a $950 million “debtor-in-posession” credit facility from Citigroup.

In its most recent quarterly report, for the September quarter, Kodak had $862 million in cash and equivalents on the books, plus a $126 million long-term revolver line of funding, against $2.32 billion in short-term obligations, $1.36 billion in long-term debt, mostly in senior secured and senior convertible notes, and $2.55 billion in pension obligations.

Kodak’s $300 million worth of 7.25% notes due November of 2013 were recently trading for 31 cents on the dollar, but some longer-dated issues have fetched much better prices, such as the $500 million worth of 9.75% coupon notes due March of ’18, recently trading for around 80 cents.

Moody’s Investors Services cut the company’s credit rating on January 5th to Caa3 from Caa2, while S&P has the debt at CCC-.

Digital Transformation

CEO Antonio Perez said the filing, made in the U.S. Bankruptcy Court for the Southern District of New York, was a “significant step toward enabling our enterprise to complete its transformation” into a digital business. The company made 75% of revenue from digital last year.

Perez said Kodak will seek to “maximize the value in two critical parts of our technology portfolio,” those being its digital imaging patents, which, it said, “are essential for a wide range of mobile and other consumer electronics devices that capture digital images and have generated over $3 billion of licensing revenues since 2003,” and various�materials deposition technologies Kodak has invented.

Whole Lotta Suing Going On

Kodak stock has fallen a little under 90% in the last 12 months, and had hit a high of $5.55 at one point in the last year.

Kodak shares had risen 5% to 58 cents in late trading Tuesday evening after the company said it sued Samsung Electronics (SSNLF) for infringement of some of those patents.

In addition to Samsung, Kodak has sued a Who’s Who of the digital mobile world, including a suit against Research in Motion (RIMM) for patent infringement dating back to 2008, and coming up for trial again in March; two suits against Apple (AAPL) dating back to January of 2010; and a complaint to the International Trade Commission that same year against Apple and RIM. The company is, of course, also a defendant in several counter-suits by Apple and others.

Kodak is expected to report earnings on January 26th.

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