* Kodak shares rise 83 percent
* Credit default swaps trading at distressed levels
* Notes due Nov 2013 plunge by more than 30 percent
* Kodak makes $14 million bond payment on Monday
* Company denied bankruptcy plans on Friday
(Adds bondholder's comment, pricing data on bonds)
By Liana B. Baker
Oct 3 Shares of Eastman Kodak EK.N as much
as doubled on Monday after the ailing company denied it had any
intention of filing for bankruptcy, but creditors continued to
doubt its chances for survival.
Speculation Kodak was on the verge of filing for bankruptcy
flared last Friday and its shares fell more than half after
reports that the company had hired law firm and restructuring
specialist Jones Day. [ID:nS1E78T1CZ]
Kodak later said it "is committed to meeting all of its
obligations and has no intention of filing for bankruptcy." It
also made a $14 million payment to bondholders on Monday,
spokesman Chris Veronda said.
Once synonymous with photography, Kodak has struggled with
the move to digital cameras and failed to turn a profit since
2007. It had been exploring a sale of its digital imaging
patents, worth an estimated $2 billion, and hired investment
bank Lazard in July to explore options. (For a story on Kodak's
history, click on [ID:nS1E78T1I8])
Wall Street heaved a sigh of relief, sending Kodak shares
83 percent higher to $1.43 by mid- afternoon. But that did
little to soothe Kodak's creditors.
Credit default swaps, used to protect against a debt
default, were trading at very distressed levels, reflecting
high concerns that Kodak might default in the near term.
It now costs $7.1 million paid upfront to insure $10
million of Kodak debt, in addition to annual payments of
$500,000, according to data provider Markit. That was up
significantly from an upfront cost of around $5.25 million per
$10 million in bonds insured just about a week ago.
Creditors also continued to dump Kodak bonds. Its $300
million of 7.25 percent senior unsecured notes due November
2013 plunged by more than 30 percent in price, with its last
bid at 33 cents on the dollar, down from 48 cents on Friday.
The notes have lost close to two-thirds of their value
since Sept. 26, according to Thomson Reuters pricing data.
Gregg Abbella, a principal at Investment Partners Group,
said he received a payment from Kodak on Monday for his bonds
due April 2017. He said that Kodak's bonds may be losing their
value because investors are selling their bonds once they
receive their payments.
"People probably stuck around to get the payment and now
they don't want to stick around to see how this shakes out,"
Abbella said, referring to Kodak's recent troubles.
The company borrowed $160 million against its credit line
(Additional reporting by Karen Brettell, Caroline Humer and
Dan Burns; Editing by Robert MacMillan and Steve Orlofsky)