Kodak Snags Loan of $793M to Climb Out of Bankruptcy, With One Condition

Kodak has finally been thrown a lifeline. Yesterday, the beleaguered photography company announced that it had convinced banks to loan it $793 million in order to climb out of bankruptcy by the first half of 2013. The loan agreement comes with one big catch: Kodak must be able to sell its extensive collection of patents for at least half a billion dollars.

Although there have been reports over the past year that Kodak was close to finding a buyer for the intellectual property, it has so far failed to do so. Kodak doesn’t seem worried: in its announcement, the company said it is “confident it will achieve” the patent sale.

The $793 million will be borrowed from a group of investment firms and major banks, including JPMorgan Chase and UBS AG. $476 million of the loan would be new cash in Kodak’s pocket, while the remaining $317 million will used to pay off old debts.

In order for the new cash injection to pay off, Kodak executives will need to find a way to stop the bleeding. The Wall Street Journal reports that the company is still burning through money:

On Monday, the bondholders Kodak didn’t choose and other similarly situated creditors demanded in a court filing that they be allowed to determine Kodak’s path out of Chapter 11, saying they had “lost all faith” in company executives. The critics said Kodak had lost nearly $1 billion from operations since filing for bankruptcy, or roughly $107 million a month, and was expected to keep draining cash.

Chief Executive Antonio Perez and other Kodak senior executives have presided over consistent operating losses and allowed the company to “burn cash at an astounding rate,” the lawyers said.

If and when Kodak does finally emerge from bankruptcy protection, it’ll be a company that’s focused on commercial printing. It has already sold off virtually all of the consumer-oriented photography businesses that photographers once loved.

(via Photo Rumors)

Image credits: Photo illustration based on Chase Bank, Wilmette, Illinois by vxla, Burning Bill by Images_of_Money

  • branden rio

    Why aren’t they bringing in new management?

  • slvrscoobie

    Seems obvious that the old methods kodak used to make money are not working, why would those old managers work either?!

  • Denver Wedding Photographer

    Interesting catch with the patents.

  • kyoshinikon

    With 1/2 of their patents gone, what will kodak be making money by? Licensing their name?

  • Mark

    I think the damage is already done, someone just lost 793 million dollars. Who wants to buy the Easyshare name?

  • ffacker

    Kodak’s old business model was sell them crappy cameras and make money on the film or sell them crappy printers and make money on the ink. They never found a real business plan for the digital age.

  • Cbird54

    It’s really kind of sad to see such a historical brand sputter and die like this. However I’m 27 and honestly I only ever knew Kodak sold film, cheap throwaway cameras and POS digital cameras… oh and those retarded digital frames old people seem to like. So really I’m kinda not surprised in a lot of ways either.

  • Cbird54

    Really that’s not a long term business plan of any sort being known for selling crappy things.

  • razster

    I hate the Easyshare! It is a nightmare when our clients purchase that instead of our recommended cameras.

  • Michael Zhang

    One of the major banks loaning the money to Kodak is JPMorgan Chase. Third paragraph :)

  • BelieveInFilm Gordon

    They won’t succede. They run out of cash if they don’t sell their patents for at least $500,000,000 and with that public knowledge they have zero bargaining power. All anyone who might want the patents has to do is wait and they can get them cheaper.

  • Will

    So how much of that money will go to bonuses to people who don’t deserve it? Also will they help out any of the families that they screwed over by cutting their retirement plans and much needed health benefits?

  • Rob Shook

    I read that, but it’s still a random Chase in, according to the “caption,” Illinois. I don’t know why a picture of the building illustrates the article, but if you wanted to go that route there is a Chase bank in Rochester. It’s one of the tallest buildings in the city and from the right angle Kodak headquarters fits in the frame.

    Maybe it’s a story that just doesn’t need pictures. I’m just saying that the ones used detract from the quality of this piece.

  • PhotoShark

    Why does it matter? This isn’t the New York Times…its a photo blog. Relax, man. Just read the article.

  • Dave

    Kodak has PISSED on those of us who used to use their products to make our living. They quit making B&W printing papers we relied on. They discontinued films we bought by the case. They quit servicing the Professional photographers who now use the films and papers made by others.
    Kodak can die and the “leadership” can all get AIDS – it is what they deserve.

  • Mattbuzz

    They should follow Fuji path

  • Rob Shook

    It devalues photography. It’s fine if you don’t agree, and perhaps it doesn’t matter at all. But “this isn’t the Times” is no excuse – in fac, I think it’s worse that this is a photo blog. This should be the kind of place that exemplifies quality photographs that add to the stories accompanying them.

  • Rob Shook

    They didn’t sell crappy things. Their film was among the best (there is still no film that beats kodachrome), and their papers and emulsions are still the best. I worked at a lab that uses them.

  • Peter Kleinschmidt

    You’re right to say it matters, the only part of the NY TIMES that holds value is the photography. So I wonder if I was to comment on some past article in the TIMES that actually was plagiarized, could I then say “what does that matter? This isn’t PetaPixel” They will come out of this in a struggle. The same people thought RIMM was dead, they thought they were right about Best Buy meeting its end—these small brains have never been right