Proceeds to be used to repay the outstanding
first lien term loans in full
Eastman Kodak Company (NYSE:KODK) today announced that it has
entered into an agreement for the issue and sale of $100 million
aggregate principal amount of its 5.00% Secured Convertible Notes
due 2021 (the “Convertible Notes”) to funds managed by Southeastern
Asset Management, Inc., an employee-owned, global investment
management firm (“Southeastern”).
Kodak intends to use the net proceeds of the issuance and sale
of the Convertible Notes to prepay in full its outstanding first
lien term loans, and the remainder for general corporate purposes.
To facilitate the Convertible Notes issuance, Kodak expects to
enter into an amendment to its asset based revolving credit
facility to permit the incurrence of the Convertible Notes.
“Over the last few months, the Company has worked diligently to
improve its capital structure. This refinancing is a major
milestone for the Company and supplements the proceeds from the
recent packaging sale to completely repay the Company’s first lien
term debt of approximately $395 million,” said James Continenza,
Kodak’s Executive Chairman. “It improves the Company’s balance
sheet, provides additional capital and lowers debt service costs,
which will support the realignment of our business and our emphasis
on meeting our customer needs.”
The transaction has been approved by a special committee of
Kodak’s board of directors comprised of independent directors who
are not affiliated with Southeastern and by Kodak’s board of
directors.
The transaction is expected to close during the second quarter
of 2019. The closing conditions in the purchase agreement include
entry by the shareholders who are not affiliated with Southeastern
holding a majority of the outstanding shares of common stock into
support agreements pursuant to which such shareholders agree to
execute a written consent approving the issuance of the Convertible
Notes, the conversion feature of the Convertible Notes and the
issuance of the shares of common stock issuable upon conversion of
the Convertible Notes, and related matters.
Summary of Key Terms
The Convertible Notes will be issued in an aggregate principal
amount of $100 million. The maturity date of the Convertible Notes
will initially be November 1, 2021, which may be extended at
Kodak’s option by up to three years in the event that the Series A
preferred stock is refinanced with debt or equity or the mandatory
redemption date of the Series A preferred stock is extended. The
Convertible Notes will accrue interest at a rate of 5.00% per
annum, payable to holders on conversion (as to the portion of the
outstanding balance being converted) and on maturity.
At any time while the Convertible Notes are outstanding, the
holders may convert the Convertible Notes to shares of common stock
at a conversion rate equal to 314.9785 shares of common stock per
each $1,000 principal amount of Convertible Notes (based on a
conversion price equal to $3.17482 per share of common stock (the
“Conversion Price”), which represents a 10% premium to the volume
weighted average price of the shares of common stock for the five
day trading period ended on April 9, 2019) (the “Conversion Rate”).
On an as-converted basis, the Convertible Notes will represent
approximately 31,497,850 shares of Common Stock, or 42.28% of the
shares of Common Stock outstanding after giving effect to the
issuance and conversion. The Conversion Rate and Conversion Price
will be subject to certain customary anti-dilution adjustments.
Kodak may elect to convert all outstanding Convertible Notes to
shares of common stock at the Conversion Price in the event that
its shares of common stock trade at or above 150% of the Conversion
Price for 45 trading days in any period of 60 consecutive trading
days.
Kodak may also elect to repay all outstanding Convertible Notes
at par plus accrued and unpaid interest during a specified period
following certain fundamental transactions.
The rights of the holders to convert the Convertible Notes into
shares of common stock will not be effective until the Company has
obtained approval of the issuance of the Convertible Notes, the
conversion feature of the Convertible Notes and the issuance of the
shares of common stock issuable upon conversion of the Convertible
Notes, from the holders of a majority of the outstanding shares of
common stock not beneficially owned by Southeastern.
The Convertible Notes will be guaranteed by certain domestic
subsidiaries of Kodak (the “Subsidiary Guarantors”) and will be
secured by a second priority lien on certain receivables, inventory
and other assets of Kodak and the Subsidiary Guarantors, in which
the lenders under Kodak’s asset based revolving credit facility
have a first priority security interest.
About Kodak
Kodak is a technology company focused on imaging. We provide –
directly and through partnerships with other innovative companies –
hardware, software, consumables and services to customers in
graphic arts, commercial print, publishing, packaging,
entertainment and commercial films, and consumer products markets.
With our world-class R&D capabilities, innovative solutions
portfolio and highly trusted brand, Kodak is helping customers
around the globe to sustainably grow their own businesses and enjoy
their lives. For additional information on Kodak, visit us at
kodak.com, follow us on Twitter @Kodak, or like us on Facebook at
Kodak.
About Southeastern Asset Management
Southeastern Asset Management is an employee-owned, global
investment firm founded in 1975. Southeastern employs a value
investment approach, focusing on long-term investments in strong
businesses, which are managed by good people and trade at deeply
discounted prices relative to intrinsic value. The firm seeks to
build collaborative, constructive relationships with company boards
and management to support long-term value creation. Southeastern is
headquartered in Memphis, with global offices in London, Singapore,
and Sydney. Additional information can be found at
www.southeasternasset.com.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. The offer and sale
of the Convertible Notes are being made in a transaction not
involving a public offering and have not been registered under the
Securities Act of 1933, as amended, or applicable state securities
laws. Accordingly, the Convertible Notes may not be reoffered or
resold in the United States except pursuant to an effective
registration statement or an applicable exemption from the
registration requirements of the Securities Act and applicable
state securities laws.
Cautionary Statement Regarding
Forward-Looking Statements
This press release includes “forward-looking statements” as that
term is defined under the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include statements concerning
Kodak’s plans, objectives, goals, strategies, future events,
business trends and other information that is not historical
information. When used in this press release, the words
“estimates,” “expects,” “anticipates,” “projects,” “plans,”
“intends,” “believes,” “predicts,” “forecasts,” “strategy,”
“continues,” “goals,” “targets” or future or conditional verbs,
such as “will,” “should,” “could,” or “may,” and similar
expressions, as well as statements that do not relate strictly to
historical or current facts, are intended to identify
forward-looking statements. All forward-looking statements are
based upon Kodak’s expectations and various assumptions. The
forward looking statements contained in this press release include,
without limitation, statements related to: the planned issue and
sale of the Convertible Notes and the timing thereof; the ability
to obtain shareholder approvals and meet other closing conditions
for the planned issue and sale of the Convertible Notes; the
conversion of the Convertible Notes into shares of Kodak’s common
stock; and the planned prepayment of Kodak’s first lien term loans
from proceeds of the issue and sale of the Convertible Notes. These
and other forward-looking statements are based on management’s
current views and assumptions and involve risks and uncertainties
that could significantly affect expected results.
Future events or results may differ from those anticipated or
expressed in the forward-looking statements. Important factors that
could cause actual events or results to differ materially from the
forward-looking statements include, among others, the risks and
uncertainties described in more detail in Kodak’s Annual Report on
Form 10-K for the year ended December 31, 2018 under the headings
“Business,” “Risk Factors,” “Legal Proceedings” and/or
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources,” in the
corresponding sections of Kodak’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2019, and in other filings Kodak makes
with the U.S. Securities and Exchange Commission from time to
time.
All forward-looking statements attributable to Kodak or persons
acting on its behalf apply only as of the date of this press
release and are expressly qualified in their entirety by the
cautionary statements included or referenced in this press release.
Kodak undertakes no obligation to update or revise forward-looking
statements to reflect events or circumstances that arise after the
date made or to reflect the occurrence of unanticipated events,
except as required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190521005319/en/
Media Contacts:Nick
Rangel, Kodak, +1 585-615-0549, nicholas.rangel@kodak.comOr
Southeastern Asset Management, +1 901-761-2474,
longleaf@SEasset.com
Investor Contact:Bill
Love, Kodak, +1 585-724-4053, shareholderservices@kodak.com
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