Eastman Kodak Co on Tuesday said it will seek court approval for a $406 million rights offering that could give creditors a big equity stake in the company after it emerges from Chapter 11 bankruptcy protection.<\/p>\n
Kodak said creditors agreed to backstop an offering that would let the Rochester, New York-based company issue 34 million common shares at $11.94 each, equal to about 85 percent of the equity of a reorganized company.<\/p>\n
“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.<\/p>\n
Kodak has said it hopes to emerge from Chapter 11 in the third quarter of this year.<\/p>\n
It said proceeds from the rights offering would go to repay various creditors, including more junior second-lien creditors who would no longer receive equity in the reorganized company.<\/p>\n
Kodak said its official committee of unsecured creditors has advised that it supports the backstop and rights offering.<\/p>\n
Creditors proposing the backstop are GSO Capital Partners, BlueMountain Capital, George Karfunkel, United Equities Group and Contrarian Capital, Kodak said.<\/p>\n
Kodak sought protection from creditors in January 2012 amid high pension costs, and after falling many years behind rivals in embracing digital technology in its photography business.<\/p>\n
The company has since sold a variety of assets and plans to emerge from Chapter 11 as a commercial imaging business.<\/p>\n
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