Eastman Kodak Co ( EK.N) is in advanced talks with Citigroup Inc ( C.N) to obtain financing that would be used if the money-losing photography company files for bankruptcy protection, Bloomberg News said on Thursday, citing three people familiar with the matter.
Advisers to Kodak are also lining up a "stalking horse" that would become the lead bidder for a patent portfolio should it be auctioned via the Chapter 11 process, the newswire said, citing one of the people.
Neither Kodak nor Citigroup immediately responded to requests for comment.
Shares of Kodak fell 7.2 cents to 60 cents in after-hours trading following the report. They had closed regular trading down 14.3 cents, or 17.5 percent, at 67.2 cents.
Kodak has been left behind by rivals that embraced digital camera technology faster.
The Rochester, New York-based company is trying to raise cash by selling a large patent portfolio, a sale that could enable it to avoid bankruptcy.
It also has patent litigation against such companies as Apple Inc ( AAPL.O), Taiwan's HTC Corp ( 2498.TW) and BlackBerry maker Research in Motion Ltd ( RIM.TO) ( RIMM.O), which if successful could boost the value of its patents.
On Tuesday, Kodak restructured its business operations, but it was unclear whether this would be enough to restore the company's health sufficiently fast.
According to published reports, Kodak may file for Chapter 11 protection by early February, and seek about $1 billion of debtor-in-possession financing to keep it operating while in bankruptcy.
The company is scheduled to report fourth-quarter results on January 26.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)
Kodak Retreats in Over-the-Counter Trading After Bankruptcy
By Nick Baker - Jan 19, 2012 12:43 PM CT Bloomberg
Eastman Kodak Co.’s shares declined in over-the-counter trading after the photography pioneer’s bankruptcy filing prompted the New York Stock Exchange to delist the securities. They fell 45 percent to 31 cents at 1:37 p.m. New York time on volume of 49 million shares. The Rochester, New York-based company’s stock symbol changed today to “EKDKQ” from “EK.”
Kodak started trading at the New York Stock Exchange in April 1905, according to data compiled by the market.
Kodak saw mixed performance on Friday as it fought to get back to profitability. Although it now had a cash balance of $1.4 billion, up from $500 million in a pre-bankruptcy fall 2011, its losses widened from $246 million to $366 million. The deeper impact was pinned on restructuring costs as the company hoped to sell off money-losing divisions.
Its revenue dropped 27 percent from a year ago, to $965 million, as it eliminated the camera business that had defined the company for much of its life.
Losses are likely to shrink as the reorganization costs go down. The company's position is still uncertain, as it will have few businesses outside of printers if and when it exits bankruptcy.
Much of Kodak's fate could still ride on lawsuits. A successful exit from bankruptcy would see it face an on-hold Apple lawsuit Kodak has also been suing Apple, Samsung, and HTC in an attempt to restore its financial position through patent disputes. Similar attempts to extract royalties from Apple and RIM failed and might reflect Kodak's legal future.