August 14, 2012 12:12 am

Kodak extends patent auction

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Eastman Kodak said an auction of its patents, due to end on Monday, was still ongoing as discussions continued with bidders.

The company is hoping that the sale of 1,100 of its digital imaging patents will help it emerge from bankruptcy in better shape, but initial indications were of bids much lower than it had anticipated.

Kodak said the company and its creditors had agreed to extend the timeline for announcing the outcome of the patent auction “in light of continuing discussions with bidders”.

Its statement gave no clue as to how high the bidding had gone or what stage it had reached. It was “a complex and dynamic process” and Kodak was still bound by a court order on confidentiality, it said.

Opening bids a week earlier had come in at only about 10 per cent of the more than $2bn Kodak was seeking for its innovations. They were in the range of $150m to $250m, according to people close to the bid process.

Two consortiums are understood to be competing over the patents, one led by Apple, supported by patent firm Intellectual Ventures, while the other is headed by Google, backed by RPX Corp, another patent aggregator.

Kodak also announced on Monday that it was making publicly available certain information, including financial projections for its business, following talks with creditors.

The figures showed that Kodak management expects its business to return to profitability in 2013 on $4.5bn in sales next year.

The company is pinning its future on a transformation into a supplier to the commercial printing industry, but it needs income from patent sales to help its restructuring and to pay back hundreds of millions of dollars in bankruptcy financing.

With two rival bidders involved, there was a chance the price could be driven up in the latter stages of the planned week-long process. But the low initial bids suggested the final figure could be well below Kodak’s target.

Its efforts to sell its patents and fund a turnround were undermined by a decision by the US International Trade Commission last month.

It ruled against Kodak in a case it had brought against Apple and Research In Motion, which was viewed as a test of one of its most important patents.

Apple beat Google’s bids in an auction for patents owned by Nortel Networks last year, which fetched $4.5bn, although from a much higher starting bid than Kodak’s.

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