Shares in Eastman Kodak (NYSE:EK) plunged 25% Monday after the former blue chip company drew $160 million from its credit line late last week. The move, which the company said was for "general corporate purposes," may raise questions about the company's ability to turn its business around by borrowing more money when it had told investors it would be generating cash.
Eastman Kodak had $957 million in cash as at June 30 and told investors it would have $1.6 billion to $1.7 billion by the end of the year. As at 3.15pm EDT Monday, shares in Eastman Kodak were down 25% at $1.74.
The company has positioned itself as a maker of printers, moving away from its photographic roots but has posted only one year of profit - in 2007 - since current CEO Antonio Perez joined the company in 2005.
Perez's strategy for raising cash for the company - which burned through $847 million in the first six months of the year - was launching patent suits and making deals with companies to use the firm`s intellectual property.The pipeline of settlements slowed in 2011, prompting the company to auction off 1,100 of its digital patents. Some analysts have valued its patent portfolio at $3 billion.