03.01.21
Eastman Kodak Company announced a series of financial transactions that provide access to new capital, address maturing obligations, and strengthen the company’s ability to invest in strategic growth opportunities in print, advanced materials and chemicals.
According to Kodak, the transactions reflect investors’ confidence in Jim Continenza’s leadership and the company’s strategy and technologies, placing Kodak in its best financial position in years.
Kennedy Lewis Investment Management LLC provided Kodak with an initial $225 million term loan and a commitment to provide delayed-draw term loans of up to an additional $50 million which may be drawn on or before Feb. 26, 2023.
The term loans have a five-year maturity and are non-amortizing.
Additionally, Kennedy Lewis has purchased one million shares of the company’s common stock at a purchase price of $10 per share, as well as $25 million of the company’s newly issued 5% unsecured convertible promissory notes due May 28, 2026.
As part of the agreement, Kennedy Lewis will have the right (subject to certain conditions), for three years or until it holds less than 50% of the initial principal amount of the term loans, to nominate one person to be elected to the Company’s board of directors.
“Kodak has made tremendous strides over the last few years under Jim Continenza’s leadership. We are pleased to support the company in its continued efforts to fortify its balance sheet and provide the capital assistance needed to enable Kodak to pivot forward to pursue its strategic growth initiatives. We feel strongly that the Company is well-positioned for the future,” said Darren L. Richman, co-founder of Kennedy Lewis.
Grand Oaks Capital, an investment firm founded by businessman and Paychex founder Tom Golisano, committed to investing a total of $100 million in the company.
The firm purchased $75 million of Kodak’s 5% Series C Convertible Preferred Stock and has agreed to purchase an additional $25 million of this series of preferred stock subject to HSR Act clearance.
As part of the agreement, Grand Oaks Capital will have the right (subject to certain conditions), for three years or until it holds less than 50% of the initial amount of the preferred shares or common stock into which it is converted, to nominate one person to be elected to the company’s board of directors.
With the proceeds from these transactions, Kodak repurchased one million shares of the company’s 5.5% Series A Convertible Preferred Stock due to mature on Nov. 15, 2021, from funds managed by Southeastern Asset Management for $100 million-plus accrued and unpaid dividends.
Also, Kodak has issued the Southeastern-managed funds one million shares of Series B Preferred Stock in exchange for the remaining Series A Preferred Stock held by the funds, plus payment of accrued and unpaid dividends.
“Since Jim Continenza and his team took over at Kodak, there have been dramatic improvements in operating costs and the balance sheet, as well as new product introductions. Jim’s team has also opened up the possibility of new business lines which would build on legacy assets and institutional strengths,” said G. Staley Cates, CFA, vice-chairman of Southeastern Asset Management.
Kodak also entered into a cash collateralized Letter of Credit Facility Agreement for up to $50 million and amended its ABL Credit Agreement to extend the maturity date to Feb. 26, 2024, and decrease the aggregate commitments from $110 million to $90 million.
These transactions together provide the company with up to $310 million of incremental cash to invest in growth opportunities in Kodak’s core businesses of print and advanced materials and chemicals. Furthermore, the transactions address the mandatory redemption of the Series A Preferred Stock that was required in November 2021, extend the maturity date of the Company’s ABL, and limit the amount of cash needed to service capital.
“Over the past two years, we have taken a number of significant steps to strengthen our financial position,” said Continenza, Kodak’s executive chairman and CEO. “Financing secured through Kennedy Lewis and investments made by Grand Oaks Capital and funds managed by Southeastern Asset Management represent the next step in our strategy for returning the company to growth and help position us to invest in expanding our core businesses in print and advanced materials and chemicals.”