Company declares bankruptcy as it tries to focus on restructuring
SHANGHAI - Eastman Kodak, the company that invented the hand-held camera and helped bring the world the first pictures from the moon, has filed for bankruptcy protection.
The 132-year-old firm said it had also obtained a $950 million, 18-month credit facility from Citigroup to give it time to allow it to reorganize without facing creditors.
The company said that, for the time being at least, it would be business as usual for its customers.
The loan and bankruptcy protection from US trade creditors will give Kodak the time it needs to find buyers for some of its 1,100 digital patents, the key to its remaining value, and to reshape its business while continuing to pay its 17,000 workers.
"The board of directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak," chairman and chief executive Antonio Perez said in a statement on Thursday.
"Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core intellectual-property assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company," he added.
The group had total assets of $5.1 billion and liabilities of $6.75 billion, at the end of September.
Kodak said it and its US subsidiaries had filed for Chapter 11 business reorganization in the US Bankruptcy Court for the Southern District of New York. Non-US subsidiaries were not covered by the filing and would continue to honor all obligations to their suppliers, it added.
Impact on China
Kodak (China) headquarters in Shanghai refused to comment on the latest development.
Kodak (China) has sub-branches in Beijing, Guangzhou, Xiamen and Shenzhen with three factories in Shanghai, Xiamen and Wuxi, employing a total of 5,000 employees.
The China Times, a Beijing-based business weekly newspaper, reported earlier that Kodak (China) had claimed that sales in China were growing gradually.
The company's China operations have not been reorganized and workers have not been laid off, the newspaper said.
A rival company said that the photographic film market has declined in recent years.
"We don't want to make any comment on the Kodak move but we've noticed that with the advanced development of digital cameras, the market for traditional film has suffered a downturn," said Liu Shengyin, PR manager for Fujifilm (China).
But the news boosted sales of Kodak film in Shanghai on Thursday. Zhang Liang, who runs a photography store in the city's Star Photographic Equipment Plaza, said he sold more than 400 Kodak films on Thursday, almost 10 times more than usual.
"Sales picked up all week, both online and in our actual store," said Zhang, adding that Kodak products were one of his shop's bestsellers.
"I received more than 80 online orders today - almost all asking for 10 or more Kodak films - most of them came after news of bankruptcy protection was confirmed," he said.
Rumors that the company might declare bankruptcy have been circulating for months, Zhang said.
That was part of the reason he decided to stock his warehouse.
Huang Kun, a 30-year-old photography enthusiast from Shanghai, brought 85 Kodak films on Thursday. "I suppose Kodak will increase the price," Huang said.
Huang said most of his purchases were Kodak professional-standard films as "my guess is that Kodak will re-emerge smaller, and specialize in producing professional-standard films".
The Kodak story was a hot topic on Sina weibo.
A large number of micro-bloggers expressed sympathy for Kodak while recalling their best Kodak memories.
Kodak set up more than 8,000 film-processing and developing stores by 2003 after it entered the mainland in 1994.
A fallen icon
Kodak once dominated the industry and its film was the subject of a popular Paul Simon song, but it failed to embrace modern technology quickly enough, such as the digital camera - ironically, a product it even invented.
Its downfall hit its Rust Belt hometown of Rochester, New York, with employment there falling to about 7,000 from more than 60,000 in Kodak's heyday.
Its market value has sunk to below $150 million from $31 billion 15 years ago.
In recent years, chief executive Perez steered Kodak's focus more toward consumer and commercial printers.
But that failed to restore annual profitability, something Kodak has not seen since 2007, or arrest a cash drain that has made it difficult for Kodak to meet its substantial pension and other benefit obligations to its workers and retirees.
Perez said bankruptcy protection would enable Kodak to continue to work to maximize the value of its technology assets, such as digital-imaging patents it says are used in virtually every modern digital camera, smartphone and tablet.
The company has also built up patented printing technology.
Kodak said it was being advised by investment bank Lazard Ltd, which has been helping Kodak look for a buyer for its digital patents.
Other advisers included business-turnaround specialist FTI Consulting Inc, whose vice-chairman, Dominic DiNapoli, would serve as chief restructuring officer for Kodak, supporting existing management.
In the last few years, Kodak has used extensive litigation with rivals such as Apple, BlackBerry maker Research in Motion and Taiwan's HTC Corp over those patents as a means to try to generate revenue.
Those patents may now be sold through the bankruptcy process.
Reuters contributed to this story.