Stay away from the light, Kodak! Look, here's $406m to keep you alive
Photo finish for fallen camera giant's race against death
Eastman Kodak's creditors have backed its plan to sell 34 million shares worth $406m as it prepares to exit bankruptcy protection.
Key creditors of the fallen tech giant have agreed to backstop the rights offering, which means they will pick up any stock that Kodak doesn't manage to flog to investors. The firm said that the new stocks would be equivalent to around 85 per cent of the company’s equity once it's back on the market.
"Attracting this additional funding is a strong vote of confidence in both Kodak’s plan of reorganisation and in the actions we have taken during our restructuring to create a solid future for our company,” Kodak chief Antonio Perez said in a canned statement.
“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 is hoping to leave Chapter 11 bankruptcy – which allows US firms to sort out their affairs and effectively start afresh – in the third quarter of this year. The company would use the money raised to repay creditors; particularly second tier creditors, who would no longer get any equity in the newly rejigged firm.
While the Q3 target represents a significant shift from Kodak’s earlier predictions that it could get back onto its own feet as early as July, the stock offering – if successful – will help shift the firm’s debt burden.
The company's official committee of unsecured creditors, including BlueMountain Capital and GSO Capital Partners, are the ones that have agreed to support the backstop. ®