Kohlberg Kravis Roberts & Co. Investing $400 Million Into Kodak For 16.5% Ownership

Posted Sep 17, 2009

Eastman Kodak Company (NYSE:EK)? plans to raise about $1.1 billion in the near future. About $700 million will come from the company internally as part of a debt refinancing. Kohlberg Kravis Roberts & Co., the investment firm that trades on the New York Stock Exchange as KKR Financial Holdings LLC (NYSE:KFN)? will also invest $400 million into Kodak.

Kokak will also issue $300 million in new convertible notes due around 2017. The interest rate will range from 10-10.5% per year. KKR will buy warrants to purchase about 53 million shares in Kodak. There are about 268 million Kodak shares outstanding. This means KKR will have about a 16.5% ownership in Kodak. Kodak’s $575 million of convertible bonds due in 2033 rose 2.5% to $0.98 on the dollar. This is the highest level since April 2008.

The $700 million senior secured notes that Kodak plans to raise will go towards retiring their 2033 convertible bonds. George Fisher, former Chairman of Kodak is a senior adviser at KKR. KKR was started in 1976 and is one of the biggest private equity companies in the world. They control about $50 billion in assets. Kodak was founded by Geroge Eastman around 1880.

?We believe KKR?s investment is a validation of our strategy and our team,? stated Kodak Chairman and CEO Antonio M. Perez in a press release. ?KKR has a long, successful record of working with, and investing in, companies with significant value-creation potential. We look forward to working with the KKR team to accelerate the growth of our portfolio of high-margin annuity businesses.?