NEW YORK--A judge on Wednesday approved an $843.7 million
financing deal for Eastman Kodak Co. (EKDQ), a package that will
both pay off a prior bankruptcy loan and provide Kodak with the
chance to reorganize successfully as the much leaner company it is
striving to become.
Judge Allan L. Gropper of U.S. Bankruptcy Court in Manhattan
agreed with Kodak that the loan, from a group of second-lien
lenders led by Centerbridge Partners LP, was the best available
option to Kodak. Other lenders include GSO Capital Partners and an
affiliate of J.P. Morgan Chase & Co. (JPM).
Kodak will use the proceeds to pay off the money left on an
existing $950 million bankruptcy loan from a group led by Citigroup
Inc. (C). The rest of the money will be used to fund Kodak's normal
business operations and to settle pension issues in the U.K., the
company said. More than $640 million of the money Kodak receives
can later be rolled over into financing that will fuel its exit
from bankruptcy.
"This is not to imply that we're done," said Sullivan &
Cromwell LLP's Andrew G. Dietderich, a Kodak lawyer. Mr. Dietderich
said the loan is a step toward Kodak's ultimate goal of becoming a
streamlined company providing digital imaging services for business
customers.
Since even before its bankruptcy filing, Kodak had pinned its
hopes on raising cash from the sale of 1,100 digital imaging
patents. But when the company realized it wasn't going to get
anywhere near the $2 billion or more it expected for those patents,
it decided to get out of some of its existing businesses to raise
cash as it shopped the patents. Earlier this month, Judge Gropper
approved the $527 million sale of the patent portfolio. Most of
that money will be used to pay down the existing bankruptcy loan,
which still has about $664 million left on it. The balance of the
$664 million will be paid down with proceeds of the loan Judge
Gropper approved on Wednesday.
Since it filed for bankruptcy in January 2012, Kodak has shut
down or put up for sale many of its once-core businesses, including
ending its consumer-printing business and shopping its photo kiosk,
scanner and camera-film units. It has also gotten out of its once
iconic camera business, recently signing a brand-licensing
agreement with JK Imaging Ltd. that will allow JK to make digital
cameras and projectors with the Kodak name.
The changes have resulted in thousands of layoffs at Kodak, and
the company has cut pension benefits.
In a presentation to creditors made in a public filing earlier
this week, Kodak provided an outline of its now-core commercial
imaging business. That business will be split into two main
segments: graphics, entertainment and commercial film, and digital
printing and enterprise.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Joseph Checkler at joseph.checkler@dowjones.com. Follow
him on Twitter at @JoeCheckler
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