UPDATE 2-Kodak in financing deal to leave bankruptcy

Mon Nov 12, 2012 6:15pm EST

* Bondholders, including JPMorgan, to supply $793 mln in loans

* Deal contingent on Kodak selling IP portfolio for $500 mln

* Kodak hopes to exit bankruptcy in first half of 2013

By Nick Brown

NEW YORK, Nov 12 (Reuters) - Eastman Kodak Co said on Monday it has reached a $793 million financing deal with bondholders that could take the one-time photography giant out of bankruptcy.

The deal, which still needs bankruptcy court approval, will come in the form of new loans from Centerbridge Partners, GSO Capital Partners, UBS and JPMorgan Chase & Co, Kodak said in a statement. The financing is contingent on the company receiving at least $500 million for a patent portfolio it has been trying to sell for more than a year, Kodak said.

The package should allow Kodak to emerge from bankruptcy in the first half of 2013, Antonio Perez, Kodak's chief executive, said in the statement.

"The significance of this agreement for Kodak is that it establishes a clear path for our emergence as a stronger, more focused company," Perez said.

Kodak will likely be a different company exiting bankruptcy than it was going in. In addition to selling its patent portfolio, Kodak must sell all or part of its document imaging and personalized imaging businesses in order to convert the loan into post-bankruptcy financing.

That would mean a restructured Kodak would largely be out of the consumer business, focused instead on its commercial imaging businesses.

Kodak filed for Chapter 11 protection in January in hopes of selling its intellectual property portfolio, but bids have been lower than hoped. It remains in talks for a patent sale with potential buyers, including Apple Inc and Google Inc . Kodak said in Monday's statement it is "confident" the patents will fetch the $500 million required under terms of the loan.

The financing package is comprised of $467 million in new loans and $317 million in a dollar-for-dollar exchange for amounts outstanding under Kodak's current notes.

The financing group beat out a separate contingent of second-lien bondholders that had offered financing, a person close to the matter told Reuters earlier.

Some second-lien holders on Monday filed court papers objecting to Kodak's request to keep exclusive control of its bankruptcy process through Feb. 28, a move that would allow it to seek court approval of the financing deal without other creditors being able to propose alternative plans.

Kodak said it hopes to gain court approval of the plan at a hearing sometime in December, but no date has been set.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video