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Kodak seeks to keep details of debtor-in-financing deal sealed

Rochester Business Journal
February 13, 2012

Eastman Kodak Co. has asked the U.S. Bankruptcy Court in Manhattan to keep fees and other costs in its debtor-in-financing deal with Citigroup Global Markets Inc. under wraps. It also won a bid to fast track the motion to put the DIP-fee deal’s terms under seal.

The DIP deal with Citigroup came under fire from an ad hoc committee of second-position bondholders shortly after Kodak filed a Chapter 11 petition on Jan. 19.  Committee members include Blackstone Group L.P.'s GSO Capital Partners L.P. D.E. Shaw & Co. and JPMorgan Chase & Co. The ad hoc group wants a chance to counter Citigroup’s financing proposal with one that its members believe would be more competitive.

In a Jan. 23 motion, the bondholders’ committee decried Kodak for burning through some $2 billion over the past two years, proposing to keep paying top executives’ bonuses while in bankruptcy and stonewalling its largest secured creditor on the Citigroup DIP deal’s terms until just before the former photo giant’s Jan. 19 bankruptcy filing.

In the ad hoc group’s motion, the bondholders asked the court to limit fees paid to Citigroup and to make sure the DIP deal would not call for Citigroup to collect a percentage of the maximum amount Kodak might borrow rather than a percentage of the actual sum Kodak ends up borrowing.

Under Kodak’s proposal to keep the Citigroup deal’s terms under seal, court officials, members of the official creditors committee and the creditors committee’s lawyer would be privy to fee and expense amounts. But others could only learn details at Kodak’s or Citigroup’s pleasure. 

Bankruptcy Judge Allen Gropper on Friday approved Kodak’s request to shave more than a week off the two weeks he usually requires, leaving five days for objectors a chance to file motions opposing the request to keep Citigroup’s fees hidden. As of Monday afternoon, none were filed.  

Lenders willing to advance operating cash to Chapter 11 filers usually move to the head of the line, getting paid back before lenders and creditors that were owed money before the filing.  Gropper gave the Citigroup DIP deal a preliminary green light Jan. 20, approving $650 million of the maximum $950 million in operating cash Kodak is seeking.  

(c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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