Kodak Preps For Bankruptcy
Historically, changing technology has left many innovative companies in the dark as progress marches on; It appears that this fate might be waiting for the Kodak film company.
Eastman Kodak (EK) has hired law firm Jones Day for restructuring advice as it faces growing concerns from investors over its turnaround prospects, The Wall Street Journal reported this afternoon.
The restructuring could include asset sales or other measures, including even a bankruptcy filing. Kodak CEO Antonio Perez told employees, however, that the company does not intend to seek bankruptcy protection. Kodak has 18,800 employees worldwide and is the dominant employer in Rochester, N.Y., where it is headquartered.
Wall Street investors are fearful over news that Eastman Kodak dipped into its credit line.
Shares in the 131-year-old company have dropped 73% this week following Kodak’s disclosure that it pulled $160 million from a credit line. The shares are down 84% this year.
That drawdown heightened concerns about the company’s cash flow and triggered downgrades of its credit rating. Shares were down 54% to 78 cents today, around their lowest level since at least the 1950s. Shares have been halted several times today.
Today’s news may be grim, but it’s not the first signal of trouble for the illustrious company.
Kodak was a proud member of the Dow Jones Industrial Average ($INDU) for 74 years but was removed in 2004.
Its core business was gutted by the emergence of digital technologies. The company was organized in 1892 by George Eastman, who was an inventor of simple-to-operate cameras and films. Users of the first Kodak camera would ship their cameras to the company, which would process the films.
After that, it built up a global business of making film, printing paper and cameras. It has been the biggest supplier of film to the motion-picture industry. Its chemical operations were spun off as Eastman Chemical (EMN) in 1994.