New York: Eastman Kodak’s survival over the next 12 months now depends on a multibillion patent sale or raising new debt, the one-time photography icon said on Thursday.
The company said it may incur more debt, which could add an additional $500 million in financing. This additional debt could be used to “support its ongoing operational needs,” the company said.
“The company’s ability to continue its operations... within the next twelve months is dependent upon the ability to monetize its digital imaging patent portfolio through a sale or licensing” or “the issuance of additional debt,” the company said in a filing with the US Securities and Exchange Commission.
The warning, coupled with dismal quarterly results released on Thursday, are the latest blow to the century-old American corporate icon, which is grappling with the specter of default, though Kodak denied it is making bankruptcy plans. A Moody’s analyst Richard Lane told Reuters earlier this week that the company’s credit rating as well as the trading of its debt instruments “indicate a heightened probability of default.”
Boxes of Eastman Kodak Co. Photo: Bloomberg
The company said in September it hired Jones Day, a law firm that specializes in restructuring. FTI Consulting, another restructuring firm, also touted Kodak as its latest client during its quarterly earnings call on Wednesday. FTI also counts bankrupt MF Global as a client.
Kodak reported its cash holdings fell 10% in the third quarter from the second quarter and it projected deeper losses this year as the photography company failed to gain traction with its new printers and digital cameras.
As of 30 September, the company said it held $862 million in cash, down from $957 million on June 30.
The company lowered its annual cash outlook on Thursday. It expects to end the year with $1.3 billion to $1.4 billion in cash, down from a previous forecast of $1.6 billion to $1.7 billion.
It widened its projected losses from continuing operations to the range of $400 million to $600 million, compared with a previous forecast of a loss of $200 million to $400 million.
Analysts will be listening for any details regarding the company’s sales of its intellectual property during the conference call later on Thursday. The company hired a financial adviser in July to help it shop around more than 1,100 patents related to digital imaging.
Kodak said in a statement on Thursday that the “company is pleased with the progress and level of interest in the portfolios.”