Kodak, based in Rochester, New York, will receive an upfront payment of more than $10 million, a milestone payment and ongoing royalties, said a person with knowledge of the matter. Imax gains technology letting it expand the use of digital projection on its big-screen theaters, the Mississauga, Ontario-based company said yesterday in a statement.
The 10-year deal helps Kodak narrow a cash shortfall and advances a goal of generating $250 million to $350 million in revenue this year from licensing intellectual property. The company said on Sept. 30 that it has “no intention” of filing for bankruptcy.
“This is the ordinary course of business and I think, if anything, it demonstrates that they have intellectual property other than the image capture and printing side,” said Mark Kaufman, an analyst at Rafferty Capital Markets in New York.
The cash will be used for general corporate purposes, said Gerard Meuchner, a spokesman for Eastman Kodak. He declined to disclose terms.
Kodak rose 4.8 percent to $1.30 at the close in New York. The shares have tumbled 76 percent this year.
Imax fell 4.3 percent to $16.64 and RealD Inc. (RLD), a maker of competing projection technology, declined 6.7 percent to $10.07.
Kodak put a separate set of digital-imaging patents valued at an estimated $3 billion up for sale in July. The company is facing pressure from its bondholders to use cash from asset sales to pay down debt, people familiar with the situation said last week. Some bondholders have met with bankruptcy lawyers and restructuring advisers to help ensure they are paid, the people said.
The Kodak technology will enhance the brightness of digital projection, Imax Chief Executive Officer Rich Gelfond said. This will enable Imax to display pictures using digital images on its screens larger than 80 feet (24 meters) instead of being dependent on 70mm film, as well as in dome theaters, Imax said. The technology is expected to debut by the second half of 2013, the company said.
“The Eastman Kodak technology helps present a really bright image,” Gelfond said in a telephone interview. “The cost comes down and enables this to happen.”
Kodak engineers will work with Imax employees during the next 18 months to bring the technology to Imax theaters, the company said. Kodak’s technology is expected to illuminate screens as large as 100 feet and dome theaters with a brightness and clarity not currently available, Imax said.
Kodak’s operations used $847 million in cash during the first half of this year, company filings show. At the end of the second quarter, Kodak had $957 million in cash and near-cash items.
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