Eastman Kodak Company announced that Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York has approved initial availability of $650 million in interim debtor-in-possession (DIP) financing by Citigroup. Kodak will use these funds, among other things, to pay vendors and other suppliers for all post-petition goods and services, and to operate its day-to-day business activities. The judge set February 15, 2012 as the date of a hearing to issue the final order regarding first-day motions.

According to court documents, Kodak is receiving the financing, which consists of a $250 million revolver and a $700 million term loan, from Citibank Global Markets. Citicorp North America is the administrative, collateral and syndication agent on the financing.

The revolver is priced at a base rate plus 225 basis points or LIBOR plus 325 basis points. The term loan is priced at a base rate plus 750 basis points or LIBOR plus 850 basis points. The base rate is the highest of prime, the federal funds rate plus 0.5% and LIBOR plus 1%. LIBOR has a floor of 1.5% on the term loan.

Court documents noted that Kodak owes $100 million on a first lien revolving credit facility and $96 million in letters of credit from Bank of American, Citicorp, Citibank, Wells Fargo Capital Finance, Citigroup USA, Morgan Stanley, PNC Bank, Bank of New York Mellon, Industrial and Commercial Bank of China Co. and Sumitomo Mitsui Banking. The first lien date is dated April 26.

As previously announced, Eastman Kodak Company and its U.S. subsidiaries filed to reorganize its U.S. business under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. Non-U.S. subsidiaries were not part of the filing. The interim DIP approved as part of the first-day motions represents the first portion of the fully committed, $950 million DIP credit facility that it obtained from Citigroup to enhance liquidity and working capital.

Kodak also reported that the court has approved additional first-day motions, which assures that ongoing business will not be disrupted. In this regard, Kodak received authorization from the court to:

  • Pay U.S. employees in the usual manner and to continue their healthcare and other benefits programs without disruption

  • Pay certain pre-petition wages and reimbursable U.S. employee expenses

  • Maintain and administer customer programs and honor pre-petition obligations to customers including all pending orders, warrantees, and other customer programs

  • Continue to use existing cash management systems and maintain existing bank accounts

    Antonio M. Perez, chairman and CEO, stated, “The court’s immediate approval of these critical first day motions is an important first step, enabling us to continue to operate our U.S. business in ordinary course, and putting us on the right path to a successful reorganization.”

    The company and its Board of Directors are being advised by Lazard, FTI Consulting and Sullivan & Cromwell.

    Previously on abfjournal.com:

    Kodak Files for Chapter 11; Citigroup to Provide DIP Loan, Thursday, January 19, 2012