Kodak Is Preparing A $406 Million Rights Offering As They Exit Bankruptcy

Posted Jun 19, 2013

Eastman Kodak Company is seeking a court approval for a $406 million rights offering after they emerge from Chapter 11 bankruptcy.  This would give creditors a large stake in the company.  Kodak’s creditors have agreed to backstop an offering that would allow the company to issue 34 million common shares worth $11.94 each.  This is equal to around 85% of equity of a reorganized company, according to Reuters.

“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,” stated Kodak CEO Antonio Perez.

Kodak is hoping to exit bankruptcy in Q3 of this year.  The company would use the proceeds from the rights offering to repay creditors including junior second-lien creditors that would no longer receive equity in a reorganized company.  Some of the creditors that are proposing the backstop includes GSO Capital Partners, BlueMountain Capital, George Karfunkel, United Equities Group, and Contrarian Capital.

Kodak asked for protection from creditors in January 2012 due to high pension costs and for their failures in embracing digital technology for their photography business.  Kodak sold off many of their assets and is planning to reemerge as a commercial imaging business.  This case is filed under In re: Eastman Kodak Co, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.