Kodak shares hit by bankruptcy fear
Shares in photography company Eastman Kodak tumbled to a new all-time low today following a report that the ailing company is getting ready to seek bankruptcy court protection.
The Wall Street Journal said Kodak is preparing for a bankruptcy 11 filing “in the coming weeks” should efforts to sell a trove of digital-imaging patents fall through.
In July, Kodak began trying to sell around 1,100 digital-imaging patents that financial analysts think might fetch 2 billion to 3 billion US dollars.
Kodak’s stock dropped 17 cents, or 26.3%, to 48 cents. It hit its previous trading low of 54 cents on September 30 when word leaked that it had hired a law firm that advises companies on bankruptcy and restructuring options.
The New York Stock Exchange warned Kodak this week that its shares will be delisted if they stay below 1 for six more months.
The Journal said Kodak is in discussions with potential lenders for around 1 billion in loans called “debtor-in possession financing” that would keep it afloat during a bankruptcy process. The newspaper said a bankruptcy filing could occur this month or early in February.
A Kodak spokesman said the company does not comment on rumour or speculation.
Kodak warned in a securities filing in November that it could run out of cash within a year unless it can sell its digital-imaging patents or raise money selling debt.
The cautionary statement came as Kodak reported a third-quarter loss of 222 million, bigger than a year earlier, and said its cash reserves fell almost 10% over the year.
Three members of Kodak’s board of directors have resigned in the past two weeks.
The latest to relinquish her post was economist Laura Tyson, a member of the Clinton administration and a former dean of the Walter A. Haas School of Business at the University of California, Berkeley.
