Kudos to the Wall Street Journal for scooping the story that Eastman Kodak(EK) is preparing a bankruptcy filing and may file by month’s end. The company is still exploring a patent sale to stave off bankruptcy, but it will be difficult to get an adequate price in this distressed situation. The company is said to be in negotiations for $1B in debtor-in-possession financing. Kodak stock is down over 30% on the news- a stark reminder to those who have chastised us in recent days for picking on a beaten down stock that there is always more room to go down. Bankruptcy will wipe out shareholders, but will provide an opportunity for the company to shed its liabilities and legacy costs, sell surplus assets in a controlled and organized way, and emerge with a profitable, but smaller operating business. We believe the future for Kodak is bright, but current shareholders will not participate in its rebirth.
Disclosure: The author holds no position in EK
- Eastman Kodak Delisting Notice a Non-Event (inelegantinvestor.com)
- Response To Critic Of Our Eastman Kodak Post (inelegantinvestor.com)
- Can Eastman Kodak’s Real Estate Save It? (inelegantinvestor.com)
- Eastman Kodak Divests Insignificant Division, Muddles Management Structure, Stock Jumps 20% (inelegantinvestor.com)