Kodak shares hit by bankruptcy fear
Published 04/01/2012 | 21:02
Shares in photography company Eastman Kodak tumbled to a new all-time low following a report that the ailing company is getting ready to seek bankruptcy court protection.
The Wall Street Journal said Kodak was 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 up 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 one dollar for six more months.
The Journal said Kodak is in discussions with potential lenders for around one billion dollars 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 US dollars, 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.