Kodak Shares Fall Below 50 Cents On Bankruptcy Rumors
Shares of Eastman Kodak fell 28 percent Wednesday after the Wall Street Journal reported that the company is preparing to file for bankruptcy. The shares, which were trading at $5.74 last year, have lost well over 90 percent of their value since then, ending Wednesday’s session at just 47 cents a share. The Journal report, citing anonymous sources, came just a day after the New York Stock Exchange warned Kodak its stock could be delisted if a rally doesn’t happen soon. The warning was triggered by the fact that the stock price had traded under $1 per share for thirty consecutive trading days.
Kodak has been exploring strategic alternatives since July, including the sale of more than 1,100 patents related to digital imaging. If Kodak is unable to find a buyer for the patents, for which Kodak is asking $3 billion, the iconic camera maker may have to file for bankruptcy protection to keep from crumbling. Kodak stock last suffered a steep decline in September, when rumors had it declaring bankruptcy, though the stock recovered after the company denied the speculation.
Also in September, Kodak announced that it was tapping a credit line for $160 million, citing operating expenses. The move prompted downgrades of Kodak debt securities by Moody’s and then Fitch, and by the end of the month the company warned bankruptcy could result if a buyer wasn’t found for the patent portfolio.
The difficulty the company has had in selling its patents is puzzling to some analysts, as tech giants have been spending billions of dollars to arm themselves with technology patents. For example, a group led by Apple and Microsoft paid $4.5 billion for a group of patents from bankrupt Canadian telecom Nortel in July. Not to be outdone, search giant Google agreed in August to shell out $12.5 billion for Motorola Mobility in August for the sole purpose of acquiring its patents.