Kodak Reaches Deal to Give 85% of Company to Key Creditors

Eastman Kodak Co. (EKDKQ) said it reached a deal, subject to court approval, that would allow it to repay its second-lien creditors in cash instead of equity in the company.

Kodak, which is working its way through bankruptcy court, had previously planned to exit Chapter 11 protection under the control of second-lien bondholders, whom it would ask to forgive the $375 million they are owed in exchange for an 85% stake in the restructured Kodak.

Now, Kodak said key creditors agreed to back stop a $406 million rights offering for common stock in the company upon emergence from Chapter 11, with Kodak expecting to use the proceeds to repay the second-lien creditors, who will no longer receive equity in the reorganization plan.

The proposal would permit Kodak to offer its creditors up to 34 million shares of stock for the purchase price of $11.94 a share, equivalent to about 85% of Kodak upon emergence.

"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," said Kodak Chief Executive Antonio M. Perez.

Kodak has filed a motion to approve the backstop commitment with the U.S. Bankruptcy Court for the Southern District of New York, which is scheduled to be heard on June 25. Kodak also filed on Tuesday an amended plan of reorganization.

Write to Ben Fox Rubin at [e-mail]

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