Eastman Kodak Co. (EKDKQ) will meet with lenders on July 15 at 1 p.m. in New York to discuss $695 million of loans its seeking for distributions to creditors as part of a reorganization plan, according to a person with knowledge of the transaction.
The photography pioneer that filed for bankruptcy in January 2012 is seeking a $420 million, six-year first-lien term portion that will pay interest at 4.75 percentage points to 5 percentage points more than the London interbank offered rate, said the person who asked not to be identified because terms are private. The lending benchmark will have a 1 percent minimum.
“This financing will enable Kodak to repay secured creditors and debtor-in-possession loans, finance its exit from Chapter 11 and meet working capital and liquidity needs,” Christopher Veronda, a spokesman for Kodak, said in a telephone interview. “We expect the new financing proposal to provide more favorable terms to our existing loan arrangement.”
The company is scheduled to return to court on Aug. 20 for approval of its bankruptcy plan, financing for which is an “essential component” for Kodak’s restructuring, the company said in court papers in U.S. Bankruptcy Court in Manhattan. JPMorgan Chase & Co., Bank of America Corp. and Barclays Plc are arranging the financing, Rochester, New York-based Kodak said in a June 20 statement.
The transaction includes a $275 million second-lien loan that comes due in seven years, the person said. It may pay interest at 8.25 percentage points to 8.5 percentage points more than Libor with a 1.25 percent floor.
The first-lien piece will be offered to lenders at 99 cents on the dollar, while the second-lien slice may be sold at 98.5 cents, the person said. Such discounts reduce proceeds for the borrower and boost the yield for investors.
The financing agreements are subject to conditions, including approval by the Bankruptcy Court, the company said in the statement. It includes an asset-based revolving line of credit that comes due in 2018 of as much as $200 million.
First-lien debt is repaid first in a bankruptcy or liquidation; second-lien debt is repaid next.
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