A bankruptcy judge signed off on a deal that will keep more than
15,000 of Eastman Kodak Co.'s (EKDKQ) photograph-printing kiosks in
CVS Caremark Corp.'s (CVS) retail stores for the next four
years.
Judge Allan L. Gropper of the U.S. Bankruptcy Court in Manhattan
on Friday signed off on the settlement between the two companies,
which Kodak announced last month.
Under the deal, Kodak's photo kiosks will remain in CVS pharmacy
stores through 2016, ensuring the eventual buyer of Kodak's
personalized imaging business doesn't lose the biggest customer for
its kiosks. An existing agreement would have expired at the year's
end.
"At this juncture, as the debtors are seeking to market their
personalized imaging business, which includes the [kiosk]
operations, for sale, maintaining a customer relationship with CVS
is essential to maximizing value of the business," Kodak said in
court papers.
Kodak said it has 105,000 photo-printing kiosks around the
world, more than 15,000 of which are located throughout some 7,400
CVS stores in the U.S. Customers can upload, edit, share and print
images at the kiosks, which Kodak began putting in retail stores in
the early 1990s.
In addition to preserving CVS and Kodak's existing relationship,
the deal also resolves competing claims between the two companies.
Kodak agreed to reduce its $10.87 million claim by $4.5 million and
will get $6.37 million from CVS. CVS will also get an $18.35
million unsecured claim against Kodak, payable under the latter's
reorganization plan.
Once known for selling cameras and film to individual customers,
Kodak is aiming through restructuring to focus on its commercial
printing operations.
Kodak put its personalized imaging business and document-imaging
up for sale in August once it became clear that the company's
portfolio of digital-imaging patents wouldn't be the cash boon it
had hoped. Together, the two business units contributed more than
40% of the company's 2011 revenues.
Kodak is still searching for a buyer for its patents, which
number about 1,100. A sale, for at least $500 million, is a
condition of a proposed $830 million financing package from a group
of Kodak's second-lien bondholders.
Kodak has taken one step closer to meeting that condition: The
Wall Street Journal reported last week that a group of unknown
bidders has offered more than $500 million for the patents, though
the company declined to comment.
Friday, the bankruptcy court will consider allowing Kodak to pay
the proposed lenders fees and firm up the financing commitment.
The proposed lenders, including units of D.E. Shaw Group and
Litespeed Management, beat out a rival financing offer of $793
million from a fellow bondholder group that included Centerbridge
Partners and J.P. Morgan Chase & Co. (JPM).
Kodak said it plans offer all of its second-lien bondholders the
chance to participate in the new financing, a request that the
court will review at a Dec. 19 hearing.
Kodak, of Rochester, N.Y., sought Chapter 11 protection in
January.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Jacqueline Palank at
jacqueline.palank@dowjones.com.
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