--Deal includes four major motion-picture studios
--Payments to studios will get high priority in Kodak's bankruptcy case
--Kodak film has shot 80 "Best Picture" Oscar-winning films
NEW YORK--Eastman Kodak Co. (EKDKQ) forged new deals with movie-studio partners including Walt Disney Co. (DIS) and Warner Bros. Entertainment Inc. that should ensure movie cameras stay loaded with Kodak film until at least 2015.
In a Tuesday filing light on details, Kodak said it will seek a judge's approval to cancel its old agreements with the studios and replace them with new ones with different terms, including an increase of the price for the film used in cameras and to print films in theaters.
The filing, made with U.S. Bankruptcy Court in Manhattan, also contains a clause that would allow Kodak to get out of motion-picture-film manufacturing by giving the studios 180 days' notice. A hearing on the matter was set for Sept. 19.
The agreement, which also includes NBC Universal Inc. and Paramount Pictures Corp., has the support of Kodak's official committee of unsecured creditors. As part of the agreement, the studios get "administrative" status on their claims against Kodak, meaning payments to the studios are at the top of the totem pole in Kodak's bankruptcy case.
Essentially, Kodak's deals with the movie studios bring the old ones up to date, considering 2012 film and commodity prices. They also ensure the movie studios will keep buying a specified volume of Kodak's film, with Kodak continuing to give the studios rebates and discounts. In its filing, Kodak said it owes the studios $26.6 million for such incentive programs. Kodak didn't provide more specific details on the terms of the contract, citing confidentiality concerns.
"Kodak is pleased to be able to extend its longstanding relationships with these important motion picture customers," said Kim Snyder, president of Kodak's Entertainment Imaging division. "We're very happy to see their confidence in the Kodak brand by signing multiyear agreements with us."
Longstanding relationships with the movie studios contribute to Kodak's status as an iconic company--80 "Best Picture" Oscar winners were shot with Kodak film, according to the company--but they aren't a key factor in the company's reorganization. In its latest annual report filed with the Securities & Exchange Commission, Kodak said the unit related to motion-picture film accounted for 9% of the company's 2011 revenue.
Instead, the reorganization hinges on the company's digital-patent-portfolio auction, the results of which Kodak delayed announcing earlier this week.
The patents, which Kodak hoped could fetch more than $2 billion, received opening bids of less than $500 million, The Wall Street Journal reported. While a bidding war between suitors including Google Inc. (GOOG) and Apple Inc. (AAPL) could ensue, the low bids suggest the company might struggle to raise the money it needs repay its creditors and reorganize successfully.
Kodak, based in Rochester, N.Y., filed for Chapter 11 protection in January after failing to sell its patents outside of bankruptcy court. The company's photography-driven business became marginalized by increased digital competition, and it struggled with high labor and pension costs.
In February, Kodak said it will close its camera business, which makes digital cameras, pocket video cameras and digital picture frames, in a move that could save it $100 million annually. Kodak intends to focus on retail and desktop-inkjet printing rather than photography after it completes its restructuring.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to )
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