Eastman Kodak may need patent sale, new debt to survive

ROCHESTER, N.Y. ― Eastman Kodak Co spooked investors on Thursday by warning it may need to raise new debt or complete a multibillion-dollar patent sale to survive the next 12 months, sinking shares by as much as 11.7 percent.

The photography company also posted dismal third-quarter results, with cash holdings down 10 percent from the second quarter, and it projected deeper losses this year as its new printers and digital cameras failed to gain traction.

Speculation that Kodak was on the verge of filing for bankruptcy flared at the end of September after the company said that Jones Day, a law firm known for working on restructuring cases, was one of its advisers.

Kodak has denied that it plans to file for bankruptcy, but gave a stark warning on Thursday about its liquidity over the next 12 months.

“The Company’s ability to continue its operations … is dependent upon the ability to monetize its digital imaging patent portfolio through a sale or licensing of the relevant patents and/or the successful execution of the alternative actions, which could include the issuance of additional debt, listed above,” Kodak said in a filing with the U.S. Securities and Exchange Commission.

Antonio Perez, the longtime CEO, downplayed the company’s warnings in the SEC filing on a conference call with analysts. He said the SEC requires all companies to identify potential risks and that it does not imply the company or its patent sale is in danger.

“These requirement statements should not be misunderstood in any way as dampening the optimism or ability to complete the sale of our digital imaging patent portfolio, which is very high,” he said.

Kodak hired investment bank Lazard in July to help it sell more than 1,100 digital imaging patents, which analysts have estimated could be worth as much as $2 billion to $3 billion.

It is not clear what interest there is in the patents or if they would fetch as much money as Kodak hopes, but the public cash woes may hurt the bargaining process, analysts said.

“They are trying to get market value but everyone knows they need to sell,” said Brean Murray analyst Ananda Baruah.