Kodak may seek protection from creditors within weeks and then hold an auction to sell its patent portfolio, said the people, who asked not to be identified because the talks are private. Kodak may seek about $1 billion in so-called debtor-in- possession financing, though terms may change, two people said.
Advisers to Kodak are lining up a bidder that will be the frontrunner or so-called stalking horse bidder for the patent portfolio should the company file, one person said.
Moody’s Investors Service cut ratings on about $1 billion of Kodak’s debt on Jan. 5, citing “a heightened probability of a bankruptcy” as liquidity deteriorates. In September, after a report by Bloomberg News about Kodak weighing options, the company issued a statement saying it has “no intention of filing for bankruptcy” and that it is pursuing patent sales.
Spokesmen for Rochester, New York-based Kodak and New York- based Citigroup declined to comment.
Kodak fell 28 percent to 48 cents in early trading. The New York Stock Exchange warned Kodak on Jan. 3 that it needs to get its share price back above $1 within six months to continue trading, under listing standards rules.
Kodak’s cash and equivalents fell to $862 million at the end of its third quarter from $1.4 billion a year earlier. The company is scheduled to report fourth-quarter results Jan. 26.
Chief Executive Officer Antonio Perez is seeking to raise cash by selling a portfolio of more than 1,100 digital imaging patents, and some other business units, while pursuing royalties from Apple Inc. (AAPL) and Research In Motion Ltd.
Three board members resigned last month: Laura D. Tyson, a director since 1997, and Adam H. Clammer and Herald Y. Chen, directors from private-equity firm KKR & Co. who were elected in September 2009. Communications chief Gerard Meuchner left the company “to accept another opportunity,” Kodak said Jan. 5.
Kodak was founded by George Eastman, who developed a method for dry-plate photography before introducing the Kodak camera in 1888, according to the company’s website. It went on to invent film enabling Thomas Edison to develop the motion picture camera, Brownie cameras and Kodachrome film.