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Bankrupt Eastman Kodak (EKDKQ.PK) is seeking expressions of interest for its patent portfolio...

Bankrupt Eastman Kodak (EKDKQ.PK) is seeking expressions of interest for its patent portfolio ahead of a sale that some think could fetch over $2B. Major tech companies are expected to be among the bidders. However, the final price could depend heavily on the outcome of Kodak's ITC complaints against Apple (AAPL) and Research In Motion (RIMM); a ruling is due on May 21.
Comments (7)
  • deercreekvols
    , contributor
    Comments (5247) | Send Message
     
    Anyone bidding on the nuclear reactor in the basement of Eastman Kodak?

     

    Where is Jon Corzine?
    15 May 2012, 10:33 AM Reply Like
  • csparksrmc
    , contributor
    Comments (24) | Send Message
     
    Is anybody out there buying EK notes while the company is in bankruptcy? If so, what is the strategy?
    15 May 2012, 10:37 AM Reply Like
  • skibimamex
    , contributor
    Comments (436) | Send Message
     
    The 2nd lien secured notes are around 83-84 - the presumed strategy is that upon completion of the IP sale, proceeds will pay down the DIP first and remaining will be sufficient to recover par plus accrued.

     

    The unsecured notes (7 1/4 due 13 and the 7% cvrts due 17) will own the restructured equity of a slimmed down printing-centric business (assuming that mgmt doesnt burn all the cash first). The value of the recovery to the unsecured notes is somewhat driven by whether the underfunded pension costs, which are mainly at off-shore entities (and currently not in bankruptcy), are consolidated with the bankrupt US holding company due to inter-company guarantees. This paper trades in the 26-27 pts range (they were 30-31 a couple of weeks ago) and I've seen distressed debt analysts pin anything from zero to 50¢+ recoveries to the unsecured notes, largely a function of how much the imaging IP auction will fetch. If you think the patent portfolio proceeds is over $2B, then you are bullish on 50¢+ recoveries, but if you think that it's likely to be less then $1B, then the recent price ranges of 26¢-31¢ seem fairly priced.
    15 May 2012, 10:55 AM Reply Like
  • csparksrmc
    , contributor
    Comments (24) | Send Message
     
    skibimamex,

     

    That is good information!

     

    Lets assume that you buy unsecured notes, due 2013 now at 26 cents. How long would you wait to find out what your return is going to be?

     

    Once the dust settles on bankruptcy, would you be receive cash, shares or the "new" Kodak, or both?

     

    I have just a few of these seven and a quarter %; due 2013 notes that I bought just before bankruptcy; I am considering picking up a few more.
    15 May 2012, 11:34 AM Reply Like
  • skibimamex
    , contributor
    Comments (436) | Send Message
     
    the 7% 2017 actually has slightly higher accrued interest before company filed, i think 45 days more accrued, so it's claim is 1pt higher then the 7 1/4's, and because the 7's were converts, they may trade at more places at odd-lot sizes for retail investors. institutions trade in $1mm + of face amount.

     

    the unsecured will eventually convert into some instrument upon a reorganization which i estimate wont happen until sometime in the summer of 2013 because the case is highly complex and too many constituencies, and their lawyers and advisers feeding at the trough being paid by the Kodak estate. however, if the IP auction which will be an open auction that's targeted to be completed by june 30 (so it probably slips a month), depending upon that outcome, the bonds will trade upon the expectation of what those proceeds will be. so if the auction results in $2B+, I would expect the unsecured notes to trade up to 50c -- you could sell or hold until the reorganization is complete. Note at $5B, which no one expects (just like Nortel no one expected the patent portfolio to go from the initial $900MM stalking horse bid from Google to the final $4.5B winning price from Apple-Microsoft consortium), the unsecured claims would get par'd out and all the underfunded pension satisfied, and our buddy who owns the commons stock will see that stock shoot to the moon (well, at least something like $2-$3/shr which relative to the current stock price is the moon). Playing the stock is highly speculative leveraged bet on the patent sale proceeds and you probably have almost as good odds playing scratch-off Lotto
    16 May 2012, 12:22 AM Reply Like
  • berbno1
    , contributor
    Comments (1261) | Send Message
     
    you guys certainly sound more knowledgeable than I...feel like an idiot, but bought shares at $1; thinking surely a name like Kodak would get their act together. Is there any likelihood that holding on makes any sense, or chalk up to experience and sell out at these levels?
    15 May 2012, 11:58 AM Reply Like
  • superlooper
    , contributor
    Comments (63) | Send Message
     
    There's no "white flag hanging above my door"! Something big is in the works...notice how quiet it has become...
    15 May 2012, 07:52 PM Reply Like
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