Eastman Kodak in talks with Cerberus and Silverpoint for up to USD 900m in rescue financing

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Eastman Kodak held meetings with several high-profile hedge funds on Wednesday including Cerberus Capital Management and Silverpoint to negotiate rescue financing, according to a lender, a bondholder, two sellside analysts, and a person close to the matter.

The negotiations are geared toward giving the liquidity-challenged company a four- to six-month bridge period to facilitate the sale of its digital imaging portfolio, the sellsiders told Debtwire. However, the talks could turn into DIP discussions should asset sale prospects turn bleak, said one of the analysts, and a restructuring banker.

The camera and film company is trying to raise secured capital to shore up its deteriorating liquidity profile. The size of the rescue facility could be up to USD 900m – the amount permitted in the company’s inter-creditor agreement with second lien bondholders – if partial proceeds refinance existing revolver debt, said a legal source following the matter and one of the sellsiders.

The company’s existing first lien debt load consists of a USD 400m equivalent asset-backed revolver due 2016 that had USD 160m drawn at 23 September. Kodak’s cash position back on 30 June totaled USD 957m, according to SEC filings.

For their part, an ad hoc group of bondholders owning at least half of the company’s USD 750m second lien debt load are fielding legal pitches today. The group consists of Avenue Capital, Solus Alternative Asset Management, DE Shaw, and P. Schoenfeld Asset Management (PSAM).

“If you’re a second lien holder and you think you believe in the collateral, you’d also be inclined to participate in a rescue loan, since pricing is expected to be double-digits,” a trader commented.

Kodak’s USD 500m 9.75% second lien notes due 2018 were last quoted today at 72.5-74, while its USD 250m 10.625% second lien notes due 2019 were quoted at 73-74.5, said a hedge fund analyst and a portfolio manager.

Spokespersons from Kodak, Cerberus and Silverpoint declined to comment.

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