Kodak prepares for Chapter 11 filing: report
(Reuters) - Eastman Kodak is preparing a Chapter 11 bankruptcy protection filing in case it is unable to sell its digital patents to raise capital, The Wall Street Journal reported on Wednesday.
The once-iconic photographic film pioneer is in talks with potential lenders to secure about $1 billion in debtor-in possession financing to sustain Kodak through bankruptcy proceedings, the Journal reported, citing unidentified sources.
The Chapter 11 filing could come as soon as this month or early February, the newspaper said.
Kodak shares fell about 28 percent to 47 cents on the New York Stock Exchange following the online report, which dampened investors' hopes that the company could arrange a quick sale of its patents or a financing lifeline to keep it afloat.
A spokesman for Kodak declined to comment, saying its policy is not to comment on market rumors or speculation.
Kodak warned in November that it might not survive 2012 if it was unable to secure $500 million in new debt or sell its patents. The company's cash had been shrinking as sales of its consumer products have failed to keep up with its heavy cost base, which includes employees and offices around the globe.
In a two-day meeting in mid-December of the company's board, management and advisers, executives were briefed on how to fund Kodak during bankruptcy proceedings if efforts to sell its patents fall short, a person familiar with the matter told the Wall Street Journal. Kodak needed to sell the patents or borrow more money to stave off bankruptcy, the company told directors.
As part of its efforts to raise cash, Kodak has been looking since last July for a buyer for its 1,100 digital patents, with the help of investment bank Lazard Ltd.
The Journal said Kodak is still trying to sell the patents, which could help it stave off a bankruptcy filing. If Kodak does seek Chapter 11 protection, it could try to sell its patents through a bankruptcy auction supervised by a court Continued...