OEM set to emerge from Chapter 11 bankruptcy following sale of patent portfolio and financing go-ahead.
Kodak has received court approval to receive interim and exit financing consisting of loans totalling up to $844 million (€633 million) from the Stering Committee of the Second Lien Noteholders Committee following the successful sale of its digital patent portfolio in January, reports What They Think.
The financing, approved by the US Bankruptcy Court Judge Allan Gropper of the Southern District of New York, will put Kodak in a favourable position to implement its remaining restructuring objectives, finalised its Plan of Reorganisation and finally emerge from Chapter 11 bankruptcy by the middle of this year.
Included in the financing is “new term money loans of $455 million (€341 million)”, along with up to $375 million (€281 million) worth of loans “issued to holders of senior secured notes participating in the new money term loans in a dollar-for-dollar exchange for amounts outstanding under the company’s pre-petition second lien notes”. Furthermore, should Kodak meet certain additional condition including the “consummation of a Plan of Reorganisation” by the end of September 2013 and “the resolution of the company’s UK pension obligations, the company could also be provided with the option of converting “up to $644 million (€483 million) of the loans into exit financing due five years after emergence”.
Kodak’s patent portfolio was recently sold under auction for $527 million (€395.5 million) to Intellectual Ventures LLC, which will license the patents to a number of technology companies, including Google, Apple and Samsung, with the sale being one of the conditions determining the company’s eligibility for the financing.
Commenting on the court’s approval, Antonio M. Perez, CEO of Kodak said: “The Court’s approval of this financing commitment puts Kodak in a strong position to emerge from Chapter 11. This agreement, in conjunction with the recently approved sale and licensing of our digital imaging patent portfolio, lays the financial foundation for our Plan of Reorganization and a successful emergence from Chapter 11 as a profitable and sustainable company. Taken together, these accomplishments, along with other recent developments, such as the resolution of certain of our legacy liabilities, demonstrate the tangible and meaningful progress Kodak is making as it moves through the final phase of its restructuring.”