By Joseph Checkler
NEW YORK--A judge Tuesday said creditors can vote on Eastman
Kodak Co.'s (EKDKQ) plan to exit bankruptcy as a much leaner
version of its famous former self, owned mostly by a group of key
creditors.
The approval by U.S. Bankruptcy Court in Manhattan Judge Allan
L. Gropper of Kodak's disclosure statement, the plain-language
outline of a company's restructuring proposal on which creditors
must vote, brings Kodak closer to leaving Chapter 11 as a
business-to-business company focused on commercial imaging.
If the creditors ratify Kodak's proposal, Judge Gropper will be
asked to approve the plan at a hearing later this summer,
tentatively set for Aug. 20.
Kodak plans to emerge from bankruptcy under the control of key
creditors who will get 85% of Kodak's reorganized stock in a $406
million rights offering, which they have agreed to backstop. The
proceeds of that would be used to repay second-lien bondholders
owed $375 million. Judge Gropper allowed Kodak to move forward with
that offering Tuesday, approving the company's request to pay about
$16.24 million in commitment fees and a $4.06 million closing fee
to GSO Capital Partners, BlueMountain Capital Management, George
Karfunkel, United Equities Group and Contrarian Capital.
The judge also said Kodak could move forward with an $895
million debt-financing package with J.P. Morgan Chase & Co.
(JPM), Bank of America Corp. (BAC) and Barclays PLC (BCS, BARC.LN)
serving as lead arrangers. Those banks can line up $695 million in
senior secured loans, and $200 million in revolving credit to which
they will contribute $130 million.
In late April, Kodak filed a restructuring plan that its major
creditor groups weren't happy with. After weeks of negotiations
with its official committee of unsecured creditors and the
second-lien bondholders, the company conjured up a plan that all
sides endorse. Unsecured creditors will get 15% of the stock of
reorganized Kodak, no change from the April proposal, but also will
be allowed to participate in the rights offering, the chance at 10%
of the warrants of the new Kodak and interests in a trust pursuing
litigation.
Last week, Judge Gropper approved Kodak's crucial and unusual
deal to hand over its personalized-imaging and document-imaging
deal to U.K. pensioners owed $2.8 billion, eliminating one of the
most important liabilities still remaining in its case. Upon
emerging from bankruptcy, which it hopes to do by early September,
Kodak plans to center itself around commercial imaging, which
includes digital printing and motion-picture film.
The Rochester, N.Y., company filed for Chapter 11 in January
2012 after failing to sell its digital patent portfolio. It sought
more than $2 billion for the patents, but only ended up getting
$527 million for the ones it sold. It also has shed employees and
its unprofitable businesses during its Chapter 11.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Joseph Checkler at joseph.checkler@dowjones.com. Follow
him on Twitter at @JoeCheckler
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