WEEK AHEAD: Kodak Nears Bankruptcy Exit
By Jacqueline Palank
Eastman Kodak Co. (EKDKQ) next week will seek court approval to let its creditors start voting on its latest restructuring plan, which offers improved payment terms to two key creditor groups.
The Manhattan bankruptcy court on Tuesday will review Kodak's disclosure statement, or restructuring plan outline, which its creditors will use to vote on the plan.
That plan now calls for a $406 million rights offering. Kodak plans to use the proceeds from the sale of 34 million new common shares to pay off bondholders owed $375 million. Previously, the bondholders were to have received equity in the restructured Kodak.
Kodak's unsecured creditors and retirees, a group owed $2.8 billion, could purchase up to six million shares of Kodak's new shares under the proposed rights offering. Previously slated to receive 15% of Kodak's new stock under its original restructuring plan, the unsecured creditors and retirees will instead share in cash and warrants to purchase additional stock beyond the shares set aside for them in the restructuring.
Some of Kodak's bondholders, including GSO Capital Partners and BlueMountain Capital, have agreed to backstop the rights offering by buying up any shares that go unsold. In return, Kodak is seeking court permission to pay them about $16.24 million in commitment fees and a $4.06 million closing fee.
In addition to the disclosure statement, the bankruptcy court will also consider the rights offering and related fees at Tuesday's hearing.
Also on Tuesday, AMF Bowling Worldwide Inc. will seek to exit Chapter 11 protection by way of a merger with upscale bowling-alley chain Bowlmor.
The Richmond, Va., bankruptcy court will consider confirming AMF's restructuring plan, which would combine the two companies to create the world's biggest operator of bowling alleys.
Ownership of the new company, called Bowlmor AMF, would go to AMF's junior lenders. Owed $80 million, the bondholders would receive 20% of its common shares as well as the right to purchase another 57.5% of those shares in a $50 million rights offering.
The remaining equity would be distributed to Bowlmor's current owners, Chief Executive Tom Shannon and Chief Financial Officer Brett Parker, who would keep those titles at the merged company.
Senior lenders owed $213.7 million would be paid in full in cash under AMF's restructuring plan. A settlement with general unsecured creditors over potential plan disputes would see them recover $2.35 million of the $30 million to $35 million they are owed.
On Wednesday, Residential Capital LLC will defend a critical deal with its government-owned parent before the Manhattan bankruptcy court.
The mortgage company faces a raft of objections--from the federal government's bankruptcy watchdog and its pension insurer, investors, bond insurers and banks and others--to its proposed deal to exit Chapter 11 with the help of government-owned parent Ally Financial Inc.
Ally, which isn't under Chapter 11 protection, has agreed to pay $2.1 billion to ResCap and creditors in return for protection from litigation over ResCap's mortgage business. The broad scope of those releases has caught the attention of a government bankruptcy watchdog, who said the Ally releases may violate the Bankruptcy Code.
The deal, which improves an earlier offer from Ally to pay $750 million to ResCap and its creditors, came on the heels of an investigation into ResCap's relationship with its parent.
Former Judge Arthur Gonzalez filed his report under seal the day before the settlement was reached, and creditor Berkshire Hathaway Inc. (BRKA, BRKB) will ask the bankruptcy court to unseal the report and make Judge Gonzalez's findings public at Wednesday's hearing.
Also on the agenda for that hearing is a deal that cuts the claims of bond insurer Financial Guaranty Insurance Co. to $596.5 million from $5.55 billion.
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