New step by Kodak
- to facilitate emergence as profitable and sustainable enterprise,
opting chapter 11 advantages
Eastman Kodak Company recently announced that it and its US subsidiaries filed voluntary petitions for chapter 11 business reorganization in the US Bankruptcy Court for the Southern District of New York. The business reorganization is intended to bolster liquidity in the US and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the company to focus on its most valuable business lines. The company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75 percent of its revenue from digital businesses in 2011.
Subsidiaries outside
of the US are not subject to proceedings and will honour all obligations to suppliers, whenever incurred.
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Kodak has already obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The company believes that it has sufficient liquidity to operate its business during chapter 11, and to continue the flow of goods and services to its customers in the ordinary course. Kodak expects to pay employee wages and benefits and continue customer programmes. Subsidiaries outside of the US are not subject to proceedings and will honour all obligations to suppliers, whenever incurred. Kodak and its US subsidiaries will honour all post-petition obligations to suppliers in the ordinary course.
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M Perez, chairman and chief executive officer. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we need to complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”
“After considering the advantages of chapter 11 at this time, the Board of Directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” said Perez, adding, “Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”
Kodak has taken this step after preliminary discussions with key constituencies and intends to work toward a consensual reorganization in the best interests of its stakeholders. They expect to complete its US-based restructuring during 2013.
