Jan. 20 (Bloomberg) -- Eastman Kodak Co., the photography pioneer that filed for court protection, won a bankruptcy judge’s approval to borrow as much as $650 million to support operations as it pursues a sale of patents.
U.S. Bankruptcy Judge Allan Gropper in Manhattan approved Kodak’s request for preliminary borrowing at a court hearing yesterday. The company has a $950 million financing agreement from Citigroup Inc. and will return to court for permission to borrow the full amount.
Kodak filed for bankruptcy yesterday, listing assets of $5.1 billion and debt of $6.8 billion. It needs “immediate access” to the financing to refinance debt, pay suppliers, and fund restructuring costs, it said in court papers.
“We’re here to save this company,” Marshall Huebner, a lawyer for Citigroup, said at the hearing.
The company, based in Rochester, New York, tried to sell a portfolio of more than 1,100 digital-imaging patents and pursued royalties to fund a shift to modern commercial and consumer digital printers.
Terms of the bankruptcy financing require Kodak by June 30 to file a motion with the bankruptcy court seeking approval of bidding procedures for the sale of its digital-imaging patent portfolio, according to court papers.
The company must file its bankruptcy reorganization plan, which requires court approval, by Feb. 15, 2013, under terms of the financing requirements, according to court filings.
A group of noteholders objected to the financing request, saying in court papers there should be “significant restrictions” on Kodak’s ability to borrow and spend. Kodak initially sought approval to borrow as much as $700 million on an interim basis, according to court papers. It then agreed to reduce the amount.
Andrew Dietderich, a Kodak attorney, said the judge’s approval gives the company permission to borrow $650 million.
The noteholder group accused Kodak of “a misguided strategy” of funding unprofitable businesses. Loan terms would hurt creditors by allowing Kodak “to burn an additional $700 million in what may be further folly.”
The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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