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Kodak to remain public

Rochester Business Journal
August 23, 2013

Eastman Kodak Co.'s post-bankruptcy future will be as a publicly traded company. And its initial stock price is expected to be much higher than its stock has been in years.
An analysis of the reorganized Kodak, provided to the U.S. Bankruptcy Court by David Kurtz, chairman and global head of the restructuring group of Lazard Freres & Co. LLC, puts the enterprise value of the new Kodak at $875 million to $1.38 billion.
The filing states the value of the new common equity portion of Kodak at $258 million to $756 million. That would put the value of the new Kodak stock at $6.18 to $18.12 a share, with a midpoint of $12.15.
Kodak spokesman Christopher Veronda confirmed the company will be publicly traded soon after its bankruptcy ends.
"We will be a public company upon emergence and expect that our shares will be listed on an exchange relatively soon after emergence," Veronda said.
Kodak's plan to exit Chapter 11 bankruptcy protection received a federal judge's approval this week. Kodak said it expects to complete its reorganization, including closing its settlement with the Kodak Pension Plan, and emerge from Chapter 11 on Sept. 3.
George Conboy, president of Brighton Securities Corp., said he expects there will be investor interest in Kodak's new stock, noting that its old stock, which soon will be worthless, still was trading at midweek for roughly a nickel a share.
"The market will determine the value put on (the new stock)," he said. "The creditors will sell shares, so there will be stock for sale."
Conboy said Lazard's analysis sounds reasonable, particularly given its ability to examine Kodak's operations closely. The midpoint of the stock range provided in the Lazard filing roughly matches the likely share price he has been hearing-approximately $11 a share.
"(The enterprise value) doesn't sound unreasonable for a company with $2 billion to $3 billion in revenues," he said.
"This is a new business," Conboy added. "The debt has been extinguished. It has existing customers and businesses that will generate sales, and (presumably a profit in the future)."
The last time Kodak traded above $11 a share was in October 2008.
Kodak has not disclosed which exchange the stock will trade on, though some published reports indicate it will return to the New York Stock Exchange-its home for more than 100 years prior to delisting from the Big Board after it filed for bankruptcy on Jan. 19, 2012.
Conboy expects Kodak to shop around for the best deal in terms of listing fees. That type of move is likely to exemplify the new board leadership at Kodak, made up chiefly of "money guys," who are watching their investments closely, he said.
Part of Kodak's restructuring includes an agreement with a group of creditors to invest $406 million in a rights offering for common stock once Kodak emerges. As part of the deal, the creditors agreed to backstop the rights offering of 34 million shares of Kodak's common stock for a price of $11.94 a share. That would give the creditors 85 percent equity of Kodak once the company emerges from bankruptcy.
Kodak is to use the money to fund distributions under its revised reorganization plan, which includes repayment to the company's second-lien creditors, who will not receive equity under the reorganization plan.
On Tuesday, U.S. Bankruptcy Court Judge Allan Gropper issued an order that allows Kodak to proceed with its plan to emerge from bankruptcy in early September. He confirmed the plan, which outlines the company's strategy to become a leader among firms serving commercial imaging markets.
In its restructuring since filing for Chapter 11 protection, Kodak has reduced legacy costs, liabilities and infrastructure; exited or spun off a range of non-core businesses and assets; and focused on its most profitable business lines.
"This critically important milestone marks the final step in the court process," said Antonio Perez, Kodak chairman and CEO, in a statement. "Next, we move on to emergence as a technology leader serving large and growing commercial imaging markets-such as commercial printing, packaging, functional printing and professional service-with a leaner structure and a stronger balance sheet.
"There are additional transactional steps ahead as we complete our Chapter 11 restructuring," he added, "but with the court's decision today, our emergence is now imminent."
Upon emerging, Kodak will be led by a new board of directors, with a mix of new and current board members, including Perez. However, he will serve as CEO no more than one year from the date Kodak exits bankruptcy. He has agreed to serve the company in a consulting capacity for up to two more years.
In addition to Perez, the planned board members are:
Mark Burgess, chairman of the Clondalkin Group, a global manufacturer of flexible and specialty plastic packaging, and former CEO of Graham Packaging Co.

James Continenza, president of STi Prepaid LLC, a telecommunications company, who formerly held executive positions with Anchor Glass Container Corp. and Teligent Inc. He has been a Kodak director since April 1.

George Karfunkel, chairman of Sabr Group, a consulting company, and co-founder and former senior vice president of American Stock Transfer & Trust Co. LLC.

Jason New, a senior managing director of the Blackstone Group and head of special situation investing for GSO Capital Partners.

William Parrett, former senior partner of Deloitte & Touche USA LLP. He has been a Kodak director since November 2007.

Derek Smith, a managing principal and senior portfolio manager at BlueMountain Capital Management.
Matt Doheny, president of North Country Capital LLC.
John Janitz, co-founder and chairman of Evergreen Capital Partners LLC and formerly president and chief operating officer of Textron Inc., a $10 billion NYSE-listed multi-industry company.

The current board is to serve until the new board takes on its responsibilities after emergence from bankruptcy. The new board members will serve until the next annual meeting of the company's stockholders.
Also upon emergence, two Kodak businesses are to shift to new ownership as part of the settlement agreement with the U.K. Kodak Pension Plan.
The pension plan is Kodak's largest single creditor with respect to the Chapter 11 reorganization plan. Under the agreement, which was announced in April, Kodak's personalized imaging and document imaging businesses are to be spun off under the ownership of the pension plan.

8/23/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email

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