Kodak Agrees to New Debt-Financing Package with Three Major Banks

   By Ben Fox Rubin 
 

Eastman Kodak Co. (EKDKQ) reached a deal with three major bank to be provided with $895 million in debt financing following its planned emergence from bankruptcy, a vital lifeline to help the ailing company retool its businesses and repay its outstanding debts.

J.P. Morgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Barclays PLC (BCS, BARC.LN) will serve as "joint lead arrangers" for senior secured term loans of up to $695 million. Additionally, those three banks will act as arrangers for a new senior secured asset-based revolving credit facility of up to $200 million, and have committed to provide $130 million of this facility.

"This comprehensive financing package will enable Kodak, at emergence, to repay its secured creditors under the current senior and junior Debtor-in-Possession loan facilities, finance its exit from Chapter 11, and meet the company's post-emergence working capital and liquidity needs," the company said Thursday.

It added that the new financing is expected to provide Kodak with more favorable terms than an existing rollover exit financing commitment.

Chief Executive Antonio M. Perez said the new package, combined with other restructuring efforts, "will position Kodak for a bright long-term future."

On Wednesday, Kodak said it planned to launch a $406 million rights offering, the proceeds of which would be used to repay its bondholders on its way out of bankruptcy.

The rights offering marks a shift in Kodak's restructuring strategy, which previously envisioned Kodak exiting Chapter 11 protection under the control of the bondholders.

Now, instead of handing the bondholders equity, Kodak would use the planned sale of its new common stock to raise the cash needed to pay off their $375 million claim. Kodak said the money that the rights offering raises would also help it boost the recoveries of its other creditors.

Kodak, of Rochester, N.Y., sought Chapter 11 protection in January 2012. Since then, it has been working to sell assets and shed unprofitable business lines to reorganize around its commercial-imaging business, which includes digital printers and motion-picture film.

--Jacqueline Palank contributed to this story.

Write to Ben Fox Rubin at [e-mail]

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