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Kodak Appears to Clear Hurdle in Effort to Get Out of Bankruptcy

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Rochester: Kodak Appears to Clear Hurdle in Effort to Get Out of Bankruptcy
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Kodak announced Monday that it has entered into a financing deal to secure $793 million in loans. Kodak says this deal will allow the company to continue its reorganization objectives and emerge from Chapter 11 in the first half of 2013. One financial analyst agrees.

"We would probably estimate an 80 percent chance of emerging from bankruptcy at this point, based on that plan being approved," said Michael Francis, VP of Brighton Securities.

Kodak has entered into a financing agreement with Centerbridge Partners LP, GSO Capital Partners LP, UBS, and JPMorgan Chase and Co.

To obtain the loans, Kodak must sell 1,100 of its digital patents for at least $500 million. In the summer, Kodak rejected the initial offer of $500 million from deep pocket companies such as Apple, Google, and Microsoft.

"They thought they could get one or two billion. Now the bondholders are saying you go back, get that deal on the table, get it done and we'll give you the money you need to emerge from bankruptcy,” Francis said.

Francis says some bondholders don't want to gamble with possible liquidation.

"The bondholders know they're going to lose money if this gets liquidated so Kodak is saying 'throw us a little bit more time and we think we can give you your money back.' Some people will gamble on that bet and some people won't."

Kodak released the following statement in response to the financing agreement:

"The significance of this agreement for Kodak is that it establishes a clear path for our emergence as a stronger, more focused company. The significance for our customers, partners and suppliers around the world is that it solidifies our ability to continue to serve them, innovate for them and contribute to their success."
Kodak says the financing is subject to Bankruptcy Court approval at a hearing in December, the exact date of which has not yet been scheduled.

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