Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Eastman Kodak Seeks Approval for $406 Million Rights Offering Upon Exit from Bankruptcy
Author: Joel R. Glucksman
Date: July 2, 2013
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Iconic photography pioneer Eastman Kodak said it will seek court approval for a $406 million rights offering upon exit from bankruptcy proceedings that will give creditors a large equity stake in the company.
Many of its key creditors have already agreed to the backstop, which would enable Kodak to issue 34 million common shares at $11.94 each. The amount is the equivalent to roughly 85 percent of the restructured Kodak. The proceeds from the rights offering would be used to repay various second-lien creditors, who would no longer receive equity after the reorganization, according to Reuters. Kodak noted that an official committee of creditors have already shown their support for the rights offering. Creditors that are pushing for the backstop include GSO Capital Partners, BlueMountain Capital, George Karfunkel, United Equities Group, and Contrarian Capital, Reuters reports.
“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 chief executive Antonio Perez said in a statement.
In his statement, Perez also noted that Kodak’s ability to participate in this agreement calls attention to its successful restructuring efforts, and suggests the company has a promising future ahead.
The company amended its plan of reorganization and submitted a motion to the U.S. Bankruptcy Court for the Southern District of New York asking it to approve the backstop commitment. A ruling is expected on the matter on June 25.
Kodak filed for Chapter 11 bankruptcy in January 2012 as a result of rising pension costs and declining profitability as its competitors switched to digital photography platforms. After selling a number of its patents and assets, the company said it hopes to emerge from protection in the third quarter of this year. Upon its emergence from bankruptcy proceedings, Kodak plans to fashion itself as a commercial imaging business.
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