Kodak Shares Plunge 54 Percent on Bankruptcy Rumors
Eastman Kodak, the once mighty-camera manufacturer, lost more than half its market value Friday after rumors surfaced the company had enlisted a law firm to advise on a major restructuring or bankruptcy filing. Kodak later denied it was considering bankruptcy, but the damage had already been done as Kodak share plummeted 91 cents, nearly 54 percent, to just 78 cents a share. The Wall Street Journal ran a piece saying Kodak had hired a firm to handle a restructuring, while Bloomberg reported that it hasn’t officially hired a firm, but that restructuring and bankruptcy are being considered possible options.
Monday, the iconic film American company took out a loan of $160 million, drawing from a credit line of $400 million, a move that prompted both Fitch and Moody’s to lower its credit rating, pushing Kodak’s credit profile further into junk status. Fitch even reduced one of Kodak’s ratings to CCC, a rating Fitch says “signifies that default of some kind appears probable.” Making matters worse, Kodak has been trying to move some of its massive portfolio of patents since July, and Fitch indicated that the sale would not improve the company’s credit profile. So far this year, Kodak shares have fallen a staggering 86 percent.
After the market closed, Kodak confirmed that it has indeed hired a law firm, Cleveland-based Jones Day, to advise on a restructuring plan. The company steadfastly denied, however, that bankruptcy was a route being considered. Investors responded to the assertion, rising 27 cents, almost 35 percent, to $1.05 a share.