Kodak Looking for Debt after a Disappointing 3rdQ

The imaging products major, Eastman Kodak Company (NYSE:EK) said that the company has to raise about $500 million new debt in order to close a multibillion dollar sale of patents in order to sustain for at least one more year.

Eastman Kodak posted its third quarter results earlier today which was really bad with the company’s cash holdings dropping to 10 percent from the previous quarter and the losses are expected to run deeper this year as the new digital cameras and printers failed to gain a foothold in the market.

Earlier in September, there were speculations that the company is at the verge of filing bankruptcy protection after Kodak hired Jones Day, well known restructuring Jones Day specialist.  But Kodak denied that it has no plans of filing for bankruptcy protection while mentioning the company’s liquidity over the next year.

Eastman Kodak’s future operations depend upon the company’s ability to monetize the digital imaging patent portfolio by selling or licensing the relevant patents or explore any other relevant options including issuance of additional debts according to the company’s filing at the United States  Securities and Exchange Commission.  Kodak is also in no position to provide any assurance that it will carry out the actions it has in the list created.

Eastman Kodak’s shares saw a drop of about 8.4 percent to $1.10 and the company has already lost more than 80 percent until now in the current year. The company has already hired investment banks to oversee the sale of its 1100 digital imaging patents, but it is not sure whether the sale of patents is going to help Kodak in any way or not. The company has not given any definitive timeline to any of the investors.

He company’s forecast for this year seems to be grim with Kodak cutting its earlier forecasts of somewhere between $1.6 billion to $1.7 billion to the current forecast of about $1.3 billion to $1.4 billion in cash.

Eastman Kodak’s consumer digital imaging products division which provides consumer inkjet printing, digital cameras and commercial printing reported a net loss of $90 million as compared to $67 million after the same time last year.

Kodak had been relying on the money from its licenses and patents for some time now and the IP money is drying up this year as the company continues to make huge investments in digital printing and imaging business. The company is hence looking for new financing options.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.