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Kodak reported to have $793 million finance package in place

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Bloomberg Business News and the Wall Street Journal are reporting unnamed sources as saying that Kodak has arranged $793 million to finance its emergence out of bankruptcy as a commercial printing company. 

The reported deal would be subject to court approval and  rely heavily on the company's sale of existing assets and patents for half a billion dollars, more progress in business sales and the restructure of its U.K. pension plans.

Papers filed in the US Bankruptcy Court in Manhattan today by a competing group of Kodak creditors says that the company continues:

...to suffer operating losses and burn cash at an astounding rate that is rapidly eroding the Debtor's liquidity and creditors' potential recovery.

The statement was embedded in a written objection to a request by Kodak for a 198-day extension to the period where only the debtor (ie: Kodak) may file a scenario to the court on how it plans to emerge from Chapter 11. This process is known as DIP, or debtor-in-possession financing. or financing arranged by companies while under Chapter 11.

The objection was filed by counsel representing a committee of 'second-lien noteholders'.

Today's events represent a tussle taking place between two set of Kodak bond holders over who would potentially get in on the ground floor of Kodak's emergence as a commercial print company. The group of bondholders who Kodak has reportedly not chosen to finance its reemergence said in the court documents that they have "lost faith" in Kodak's current leadership.

"Having had and wasted 10 months, it is time to break the debtors' stranglehold on the plan process so that other parties may move these cases forward."

The group represented in today's filing goes on to say that Kodak is using up its cash reserves at the date of $50 million per month and that its reserves would be depleted by the middle of 2013.

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Kate O'Connell spoke with Professor Lawrence J. Matteson from the Simon Graduate School of Business about what the potential finance package might mean for Kodak, its plans for reemergence and its creditors. 

"I think the real challenge for Kodak is, can it in fact find a commercial business strategy that can create value. If they can create value then I assume they'll work their way out of their financing problems. At least what they've published so far seems to be very sparse on whether they'll be successful as a commercial printer or not"

The full interview can be heard above.

Kodak's stock jumped 2.75% in trading following publication of the news.

The bankruptcy hearing was adjourned until December 19th.