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(Reuters) - Eastman Kodak Co on Tuesday said it will seek court approval for a $406 million rights offering that could give creditors a big equity stake in the company after it emerges from Chapter 11 bankruptcy protection.
Kodak said creditors agreed to backstop an offering that would let the Rochester, New York-based company issue 34 million common shares at $11.94 each, equal to about 85 percent of the equity of a reorganized company.
"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," Kodak Chief Executive Antonio Perez said in a statement.
Kodak has said it hopes to emerge from Chapter 11 in the third quarter of this year.
It said proceeds from the rights offering would go to repay various creditors, including more junior second-lien creditors who would no longer receive equity in the reorganized company.
Kodak said its official committee of unsecured creditors has advised that it supports the backstop and rights offering.
Creditors proposing the backstop are GSO Capital Partners, BlueMountain Capital, George Karfunkel, United Equities Group and Contrarian Capital, Kodak said.
Kodak sought protection from creditors in January 2012 amid high pension costs, and after falling many years behind rivals in embracing digital technology in its photography business.
The company has since sold a variety of assets and plans to emerge from Chapter 11 as a commercial imaging business.
The case is In re: Eastman Kodak Co, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.
Reporting by Jonathan Stempel in New York; Editing by Stephen Coates