Eastman Kodak Co., the photography pioneer that filed for bankruptcy court protection, outlined the interest rates it will pay for $950 million of debtor-in-possession financing.
The company will pay 3.25 percentage points more than the London interbank offered rate for a $250 million asset-based revolving line of credit, according to a lender presentation today on the company’s website. Kodak will pay 7.5 percentage points more than the benchmark for a $700 million term loan. The term loan has a 1 percent floor on Libor, according to the presentation.
Kodak won a U.S. bankruptcy judge’s approval on Jan. 19 to borrow as much as $650 million to support operations as it pursues a sale of patents. The Rochester, New York-based company will return to court for permission to borrow the full $950 million under its DIP financing agreement. Kodak needs “immediate access” to the funds to refinance debt, pay suppliers, and pay restructuring costs, it said in court papers.
Citigroup Inc., the sole arranger of the loan, held a call with lenders at 2:30 p.m. in New York today to discuss the financing, according to a person familiar with the terms, who declined to be identified because the call wasn’t announced publicly.
The term loan will be sold at a discount of 97 cents to 97.5 cents on the dollar, according to the lender presentation.
Christopher Veronda, a Kodak spokesman, didn’t return a telephone call seeking comment.
The company said earlier today it was proposing to pay 8.5 percentage points more than Libor for the term loan, according to a filing with the Securities and Exchange Commission. The rate was cut in part because of interest in the loan, the person said.
Proceeds of its loan will go to pay its existing revolving loan, and to fund operations as the company reorganizes, focusing on its most valuable businesses, including document scanners and digital printing solutions, Kodak said in today’s slide presentation.
Kodak forecast its cash flow for the next 13 weeks in the presentation, saying it would have an ending operating cash balance of $336.3 million for the week ended April 6.
The company tried to sell a portfolio of more than 1,100 digital-imaging patents and pursued royalties to fund a shift to modern commercial and consumer digital printers.
The loan agreement for the Chapter 11 case requires filing a motion with the bankruptcy court by June 30 seeking approval of bidding procedures for the sale. The lenders must be given a draft reorganization plan by Jan. 15, 2013. The plan and disclosure statement must be filed by Feb. 15, 2013.
A group of noteholders objected to the financing request, saying in court papers there should be “significant restrictions” on Kodak’s ability to borrow and spend. Kodak initially sought approval to borrow as much as $700 million on an interim basis, according to court papers. It then agreed to reduce the amount.
The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan).