September 30, 2011
Kodak Debt Swaps Soar as Camera Maker Said to Weigh Bankruptcy
"The cost to protect Eastman Kodak Co. (EK)’s debt from default jumped as the unprofitable 131-year-old camera maker is said to be weighing options including a bankruptcy filing.
Credit-default swaps linked to the Rochester, New York-based company rose 4 percentage points to 66.5 percent upfront, according to data provider CMA. That means investors would pay $6.65 million initially and $500,000 annually to protect $10 million of Kodak’s debt for five years.
Kodak may seek bankruptcy protection because of concerns raised by possible bidders for its patent portfolio, said three people with direct knowledge of the process. Some potential buyers of the patents are reluctant to proceed with bids because a purchase may amount to a so-called fraudulent transfer if Kodak becomes insolvent, said the people, who asked not to be named because the talks are private."
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