Kodak Said to Weigh Bankruptcy Filing
Eastman Kodak Co. (EK), the unprofitable 131-year-old camera maker, is weighing options including a bankruptcy filing because of concerns raised by possible bidders for its patent portfolio, said three people with direct knowledge of the process.
Some potential buyers of the patents are reluctant to proceed with bids because a purchase may amount to a so-called fraudulent transfer if Kodak becomes insolvent, said the people, who asked not to be named because the talks are private.
A number of suitors, such as Google Inc. (GOOG), have signed confidentiality agreements to examine the assets, said these people. If a sale were judged a fraudulent transfer, creditors could later sue for more money, said one of the people. A bankruptcy filing may help clear the way for the patent sale, said the people. The sale could fetch about $3 billion, according to estimates from MDB Capital Group.
Kodak has discussed its options with law firms Kirkland & Ellis LLP and Jones Day, the people said. It hasn’t yet hired a firm and a filing isn’t imminent, they said. Lazard Ltd. is advising Kodak on options for the patent portfolio.
“As we sit here today, the company has no intention of filing, and there is no change in our strategy to monetize our intellectual property,” said Gerard Meuchner, a spokesman for Kodak. “We’re not concerned about fraudulent conveyance in regards to the sale of our IP portfolio.”
He declined to comment on whether the company had discussed a potential filing with law firms, saying that Kodak is “focused on the fourth quarter and on delivering on our strategy to become a profitable, sustainable digital company.”
Exploring Options
A representative from Kirkland declined to comment. Katelin Todhunter-Gerberg, a spokeswoman for Mountain View, California- based Google, didn’t immediately respond to voice-mail and e- mail messages seeking comment, nor did an official for Jones Day.
Moody’s Investors Service cut Rochester, New York-based Kodak’s bond ratings this week and indicated further reductions may follow, citing “ongoing weakness” in the company’s operations. Kodak, which tapped a credit line earlier this month, has seen its market value sink by more than $30 billion from its 1997 peak.
Chief Executive Officer Antonio Perez announced plans in July to explore options for the portfolio of more than 1,100 patents, including some for processing, editing and storing images. Perez, who took the helm in 2005, has sharpened Kodak’s focus on the printing business to help revive revenue.
Sales have fallen by half since 2005 to $7.2 billion last year, with further declines predicted this year and next. The company’s losses since 2008 exceed $1.76 billion.
Kodak, whose origins date back to 1880, was founded by George Eastman, who introduced the Kodak camera eight years later, according to the company’s website. Kodak has shifted away from traditional film as consumers gravitated toward digital cameras.
source: bloomberg.com
