Kodak: The Plot Thickens

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More out of distressed company Kodak.  And what it might mean is wide open for speculation.

Iconic Kodak (NYSE: EK) has been closly watched since last September when it hired powerhouse law firm Jones Day, which specializes in Chapter 11, along with other options for insolvency.  Eyes popped when that firm was assigned to other duties and law firm Sullivan & Cromwell hired. Hunches included the possibility that Jones Day advised Chapter 11, Kodak balked.  But we don't know that.  The less we know the more rumors fly.

Since then, the rumor mill has not been disappointed.  The next big development was news that Kodak was trying to sell 1100 digital patents and obtain about $900 million from funds Cerberus Capital Management LP and Highbridge Capital Hedge Fund.  Likely, it was reported, the funding would fall short of the $900 million.

Last week, two Kodak board members, who represent private equity fund Kohlberg Kravis Roberts (NYSE: KKR), resigned without explanation, not from them, not from Kodak.  They are Herald Chen and Adam Clammer who joined the board in 2009.  About the possible reasons why, Reuters interviewed Bill Brandt, chief executive officer of turnaround firm Development Specialists and chair of Illinois Finance Authority.  Brandt posits there could be either of two explanations.  One is that Kodak might be filing Chapter 11.  These two members want to be out before it does and also there is the danger of lawsuits about liability.  Board members are increasingly sued.  That's why it's increasingly difficult to recruit them.  The second reason could be that KKR is trying to bid on the digital patents and having employees on the board might represent a conflict of interest. 

Kodak stock is at .66.  The 52-week range has been .54 to $5.85.

I do not own stock in any companies discussed.

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