Kodak announces new capital sources, debt structure
Eastman Kodak Co. announced a series of financial transactions providing access to new capital, addressing maturing debt obligations, and strengthening the company’s ability to invest in strategic growth opportunities in print, advanced materials and chemicals, the company said.
Kennedy Lewis Investment Management LLC has provided Kodak with an initial $225 million term loan and a commitment to provide delayed-draw term loans of up to an additional $50 million which may be drawn on or before Feb. 26, 2023. The term loans have a five-year maturity and are non-amortizing. Additionally, Kennedy Lewis has purchased one million shares of the company’s common stock at a purchase price of $10 per share, as well as $25 million of the company’s newly issued 5.00% unsecured convertible promissory notes due May 28, 2026. As part of the agreement, Kennedy Lewis will have the right (subject to certain conditions), for three years or until they hold less than 50% of the initial principal amount of the term loans, to nominate one person to be elected to the Company’s board of directors.
“Kodak has made tremendous strides over the last few years under Jim Continenza’s leadership. We are pleased to support the Company in its continued efforts to fortify its balance sheet and provide the capital assistance needed to enable Kodak to pivot forward to pursue its strategic growth initiatives. We feel strongly that the company is well-positioned for the future,” said Darren L. Richman, co-founder of Kennedy Lewis.
Grand Oaks Capital, an investment firm founded by businessman and Paychex founder Tom Golisano, has committed to invest a total of $100 million in the company. The firm purchased $75 million of Kodak’s 5.0% Series C Convertible Preferred Stock and has agreed to purchase an additional $25 million of this series of preferred stock subject to HSR Act clearance. As part of the agreement, Grand Oaks Capital will have the right (subject to certain conditions), for three years or until they hold less than 50% of the initial amount of the preferred shares or common stock into which it is converted, to nominate one person to be elected to the Company’s board of directors.
“Grand Oaks Capital is excited about the long-term future of Kodak,” said Golisano. “We are very confident in the company’s leadership, vision and new growth opportunities and are proud to be investing in a global company headquartered in Rochester, New York.”
With the proceeds from these transactions, Kodak repurchased one million shares of the company’s 5.50% Series A Convertible Preferred Stock due to mature on Nov. 15, 2021, from funds managed by Southeastern Asset Management for $100 million-plus accrued and unpaid dividends. In addition, Kodak has issued the Southeastern-managed funds one million shares of Series B Preferred Stock in exchange for the remaining Series A Preferred Stock held by the funds, plus payment of accrued and unpaid dividends.
“Since Jim Continenza and his team took over at Kodak, there have been dramatic improvements in operating costs and the balance sheet, as well as new product introductions. Jim’s team has also opened up the possibility of new business lines which would build on legacy assets and institutional strengths,” said G. Staley Cates, CFA, vice-chairman of Southeastern Asset Management.
Kodak also entered into a cash collateralized Letter of Credit Facility Agreement for up to $50 million and amended its ABL Credit Agreement to extend the maturity date to Feb. 26, 2024 and decrease the aggregate commitments from $110 million to $90 million.
These transactions together provide the company with up to $310 million of incremental cash to invest in growth opportunities in Kodak’s core businesses of print and advanced materials and chemicals, the company said.