Kodak (KODK) Enters $200M Conv. Preferred Stock Placement with Southeastern Asset Management

November 7, 2016 9:03 AM EST

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Eastman Kodak Company (NYSE: KODK) announced that it has entered into an agreement to sell $200 million of newly created 5.50% Series A Convertible Preferred Stock (“Preferred Stock”) to funds managed by Southeastern Asset Management, an employee-owned, global investment management firm.

Kodak intends to use the net proceeds of the sale of Preferred Stock, together with cash on hand, to prepay in full its outstanding second lien term loans. To facilitate the Preferred Stock sale, Kodak entered into an amendment to its revolving ABL credit facility to permit pre-payment of the second lien term loans and payment of cash dividends on the Preferred Stock.

“This transaction improves our capital structure and enhances our financial flexibility,” said Jeff Clarke, Kodak Chief Executive. “This is an important step forward in Kodak’s return to strength. We are very pleased that Southeastern has committed to make this significant investment and demonstrated its confidence in Kodak’s future.”

In connection with the investment, Southeastern Asset Management will have the right to nominate members to Kodak’s board of directors proportional to its shareholding on an as-converted basis.

The transaction is expected to close in November and is subject to the satisfaction of customary closing conditions. Foros acted as financial advisor and Sullivan & Cromwell LLP as legal advisor to Kodak in connection with the transaction.

Summary of Key Terms

The per share purchase price for the Preferred Stock is equal to its liquidation value of $100 per share. The Preferred Stock will have a 5.50% cash dividend rate and is convertible into shares of common stock at a conversion price of $17.40 per share. This conversion price represents a 20% premium to the closing price of $14.50 per share on November 4, 2016. On an as-converted basis, the Preferred Stock will represent approximately 11.5 million common shares, or approximately 21% of the common shares outstanding after giving effect to the issuance and conversion.

At any time after 2 years from the issuance date, if the closing price of Kodak’s common stock equals or exceeds $21.75 for 45 trading days within a period of 60 consecutive trading days, the shares of Preferred Stock will, upon notice from Kodak, convert into shares of common stock. On the fifth anniversary of the issuance date, Kodak will redeem any unconverted Preferred Stock at a redemption price equal to 100% of the liquidation preference plus any accrued but unpaid dividends.



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