Kodak files amended plan to reflect $406 million in rights offerings

By Caroline Salls

Pittsburgh, June 19 - Eastman Kodak Co. filed an amended plan of reorganization to incorporate a $406 million equity commitment, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Kodak said in the motion for approval of a commitment backstop agreement that the amended plan includes two rights offerings to raise $406 million of equity capital through the issuance of 34 million shares of common stock in the reorganized company.

Under one proposed rights offering, the company will offer holders of specified general unsecured claims and retiree settlement unsecured claims the opportunity to purchase up to 6 million shares of new common stock for $11.94 per share.

In the second rights offering, Kodak will offer some "accredited investors" or "qualified institutional buyers" the opportunity to purchase between 28 million and 34 million shares of new common stock at the same per-share price.

Backstop commitment

Under the backstop commitment agreement, the backstop parties will fund the deficit arising if subscription levels are not sufficient to raise the full rights offering amount.

The backstop commitment ensures that the Kodak debtors will have enough rights offering proceeds to fund the amended plan, the backstop motion said.

Under the initial backstop agreement provisions, Kodak will pay an initial commitment fee equal to 4% of the right offering amount, or $16.24 million, and a consummation fee equal to 1% of the rights offering amount, or $4.06 million.

The company will also pay the backstop parties' third-party fees and expenses.

The backstop parties have a right to terminate the commitment agreement if the court order approving that agreement is not entered by July 2, if Kodak files any motion for approval of an alternate transaction, if the company breaches the agreement or if the effective date of the agreement has not occurred by Oct. 3.

GSO Capital Partners, BlueMountain Capital, George Karfunkel, United Equities Group and Contrarian Capital are the firms participating in the backstop.

Creditor treatment

Treatment of creditors under Kodak's first amended plan will include the following:

• Debtor-in-possession ABL facility claims will be paid in full in cash;

• DIP term loan claims will be paid in full in cash, provided, however, that if any convertible DIP term loans are converted into emergence rollover term loans, the holder of those loans will receive the emergence rollover term loans in lieu of any other distribution;

• Priority tax claims and other priority claims will be paid in full in cash;

• Holders of retiree committee administrative claims will be paid in full in cash, provided that a VEBA trustee can elect a conversion right instead;

• Any remaining backstop expense reimbursement claims will be paid in cash and any outstanding backstop fees will be paid in cash or new common stock, at Kodak's election;

• Holders of second-lien notes claims will receive their share of the allowed amount in cash, plus fees and expenses due to the indenture trustees;

• Holders of general unsecured claims and retiree settlement unsecured claims will receive a share of an unsecured creditor new common stock pool, a share of warrants, distributions from a general unsecured creditor trust, subject to a backstop trust waiver and applicable right offering consideration;

• KPP claims will be treated in accordance with a global settlement;

• Holders of convenience claims will recover 4.5% in cash, capped at $600,000;

• Holders of subsidiary convenience claims will be paid in full in cash, provided that the total payment is capped at $300,000; and

• Holders of equity interests and section 510(b) claims will receive no distribution.

Plan comparison

Meanwhile, treatment of creditors under the company's original plan was slated to include the following:

• Second-lien noteholders were to receive cash equal to unpaid interest as of the plan effective date at the non-default contract rate applicable when Kodak filed for bankruptcy and a number of shares of new common stock equal to the outstanding principal amount of the notes multiplied by 0.09066667;

• Holders of general unsecured claims and retiree settlement unsecured claims were to receive a share of new common stock equal to the holder's share of an unsecured creditor pool;

• Holders of KPP claims were to be treated in accordance with the global settlement;

• Holders of convenience claims were to receive cash for an undetermined recovery;

• Holders of subsidiary convenience claims were to be paid in full in cash, capped at a total of $300,000;

• Holders of equity interests and section 510(b) claims were to receive no distribution; and

• Other priority claims were to be paid in full in cash.

A hearing on the disclosure statement for the amended plan and the backstop commitment agreement is scheduled for June 25.

Kodak is a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets. The company filed for bankruptcy on Jan. 19, 2012 under Chapter 11 case number 12-10202.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.