updated 06:15 am EDT, Tue October 25, 2011
Kodak rumored in deep trouble, seeks bailout
Kodak is said to be looking for $900m in emergency funding to rescue itself from insolvency. According to the Wall Street Journal, Kodak has been in talks with several hedge funds seeking financial backing to keep the company afloat while it seeks to sell off its most valuable patents. At the same time, the company hopes to continue its restructuring plans, which it hopes will return it to profitability.
Hedge funds approached by Kodak include, Cerberus Capital Management, Silver Point Capital, Centerbridge Partners and Highbridge Capital Management. While Kodak declined to comment on its capital raising plans in any detail, a company spokesman said, "As a matter of course, we are always assessing the financing strategies available to us."
Kodak has been struggling to turn its fortunes around in the face of the onslaught of digital cameras and mobile phones with cameras as users moved rapidly away from traditional print photograph. Its current strategy is to build on its photographics skills by developing new lines of personal printers that can also print high quality photos at home.
The company would use the $900 million in new funds to pay down its senior debt and use the remainder to strengthen its cash position. While the company still had $957 million in cash at the end of June, its remaining patents are valued at over $1 billion dollars and can offset and debts that it might incur in the short to medium term.
However, the patent sales can take time, particularly if the company hopes to yield the maximum value from them. It recently sold up to 10,000 of its 11,000 patents to IMAX, and has already raised over $2 billion in patent sales to date.