Eastman Kodak, in capital-enhancing transaction, nets $275M in loans

Eastman Kodak Co. received $275 million in loans as part of a capital-enhancing transaction that eliminates near-term obligations. Funds of Kennedy Lewis Investment Management LLC are the lenders, the credit agreement showed.

The debt financing comprises an initial $225 million term loan, and $50 million of delayed draw term loans until Feb. 26, 2023. The maturity on the debt is five years, and the loans don’t amortize. Alter Domus is administrative agent. Interest is 12.5%, with an option to pay 8.5% cash and 4% pay-in-kind, if the borrower chooses.

Kodak also entered into a $50 million cash collateralized letter of credit facility agreement. In addition, the Rochester, N.Y.-based company extended the maturity on an ABL credit agreement to February 2024, and decreased commitments from $110 million to $90 million.

Interest opens at L+400 on the revolving loans, tied to availability, falling to L+350 when daily excess availability exceeds 67% on average, the credit agreement showed. Bank of America is agent. J.P. Morgan is joint lead arranger and joint bookrunner. Other lenders are Siemens Financial Services, Webster Business Credit and Credit Suisse, the credit agreement showed.

At the same time Kennedy Lewis announced it bought one million shares of Kodak common stock for $10 each, and $25 million of newly issued 5% convertible notes due May 2026.

In addition to signaling a vote of confidence in management and strategy, the transactions help return "the company to growth and help position us to invest in expanding our core businesses in print and advanced materials and chemicals," the companies said in a March 1 statement.

Investment firm Grand Oaks Capital committed to a $100 million investment in the company via completed and planned purchases of Kodak preferred stock.

As part of the transaction, Kennedy Lewis and Grand Oaks Capital can each nominate a representative to the company's board.

With the proceeds from these transactions, Kodak addressed an upcoming mandatory redemption of preferred stock held by funds managed by Southeastern Asset Management.

"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," the companies said.

Kodak is a global technology company focused on print and advanced materials and chemicals. Kennedy Lewis is an opportunistic credit manager founded in 2017.