Information for Creditors January 22, 2013 8K filed
Looks like EK is ready to make some kind of press release. This was a download signed by EK internal counsel.
Just by its filings, EK must have sold its Personalized imaging and Document Imaging businesses.
I think Wednesday's Court Session, January 23, 2013, may hold the keys going forward.
Objectives from download:
* Gain access to liquidity to support its restructuring efforts
* Fairly resolve legacy liabilities that the Company could no longer afford
* Monetize non-core intellectual property assets
* Reorganize around its most valuable business lines
~~It is entirely possible there are subordination claims in that agreement.~~
It is entirely possible that I shall win the Powerball, but I won't bet on it.
~~The rationale that the bonds havent traded high doesnt mean much. I think there is no real market in the 2013/17s.~~
You were excited only 2 weeks ago when the unsecured bonds jumped from ~10 to ~13. And now you concede that "I think there is no real market in the 2013/17s". You can't have it both ways or you are deluding yourself.
~~Anybody trying to buy 635 million of these bonds would have sent the price to 30 cents, not 11 cents.~~
*If* the unsecured bonds were to have priority, it is a more favorable bet to gobble every unsecured bonds available from ~10 toward ~30, than buying a *hypothetically* subordinated claim at 11.
~~The Retirees selling their claim for 70 mil, 6 mons from a possible payoff of 200+ mil, AND the unsecured bond holders having an average price near 30 cents strongly indicate some degree of subordination.~~
These are 2 different time frames. The $ 635 M claim was sold in January 2013 at 11 when the unsecured bonds were trading at ~12. It was April 2012 when the unsecured bonds were trading at ~30.
~~These new agreements have Sept 30 as the date for the POR to be filed by Kodak.~~
It was only a deadline contingent for the agreements, not the actual date of the POR. According to the newest Amended and Restated DIP Credit Agreement on January 22,
"(ii) On or prior to May 15, 2013, deliver to the Agent drafts of an Acceptable
Reorganization Plan and a disclosure statement with respect thereto.
(iii) On or prior to May 31, 2013, file with the Bankruptcy Court an Acceptable
Reorganization Plan and a disclosure statement with respect thereto, and at all times thereafter
diligently pursue the receipt of orders of the Bankruptcy Court approving such disclosure
statement and confirming such Acceptable Reorganization Plan."
So the newest deadline for the POR is May 31.
~~The unsecured unsubordinated bonds........ but are superior to the retirees,general business claims etc. .~~
Actually I posted the rank descriptions on the prospectus of the 2013 and the 2017 before twice. Nowhere do they mention any of the above. The exception is the 2017 allows explicit subordinated clauses in the other unsecured claims to raise the priority of the 2017.
And this is, for example, from Mission Capital Advisors,
"General unsecured claims are claims without a priority for payment for which the creditor holds no security or collateral. These claims are comprised of vendor claims/trade payables, rejected executory contracts, tax indemnity claims, unsecured bank debt, unsecured bonds, litigation judgments and settlements, unsecured inter-company payables, deficiency claims, etc. In many instances a company in bankruptcy will have unsecured bonds which are treated with the same priority, i.e. pari passu, as the general unsecured claims."
Essentially unsecured bonds are pari-passu with general unsecured claims. And for the case of the 2017, only with the exception of explicit subordinated clauses in the other unsecured claims.
You may be right. And you maybe totally wrong. We dont have access to the retirees unsecured claims agreement which the unsecured creditors committee signed off on. It is entirely possible there are subordination claims in that agreement.
The rationale that the bonds havent traded high doesnt mean much. I think there is no real market in the 2013/17s. Anybody trying to buy 635 million of these bonds would have sent the price to 30 cents, not 11 cents.
The Retirees selling their claim for 70 mil, 6 mons from a possible payoff of 200+ mil, AND the unsecured bond holders having an average price near 30 cents strongly indicate some degree of subordination.
All will be clear when the POR is released. i hope they keep to the feb 28 date. These new agreements have Sept 30 as the date for the POR to be filed by Kodak.
~~There could be a clause which subordinates the claim to the extent of X cents of recovery for the bonds. That would explain the retirees selling it this low~~
Unlikely, because the unsecured bonds were only trading at ~12, when Citi bought the $ 635 M claim at 11. If such subordinated clauses were to exist in the claim, either the unsecured bonds should have traded higher than 15, much higher, or Citi would have paid lower than 11, much lower. You may want to give some credit to the bond traders. They aren't dumb to begin with.
~~The thing that sucks is that the hedge fund institutional investors ALWAYS freakin win -....... The knife fight over Kodak by the creditors is well under way.~~
Maybe think of it this way, the sharks are on our side this time because it is likely pari-passu for all unsecured claims ----- we get what the sharks get.
~~I can only hope they put in some SUBORDINATION CLAUSES on that unsecured claim.~~
Citi wouldn't have bought it at 11, if there were such a clause in the $ 635 M claim.
There could be a clause which subordinates the claim to the extent of X cents of recovery for the bonds. That would explain the retirees selling it this low and the unsecured creditors committee - which must average 30 cents/$ on their holdings- approving the issue unsecured claim.
Just purely speculation of course- but i think it could go either way.
~~It's still weired for me... ~~
I shall use Occam's Razor and assume that they needed cash, until proven otherwise. I do feel for the retirees, but it is theirs decision to make.
So far Citi has brokered $ 65 M of the claim to 5 other funds under two groups. Citi is still holding $ 570 M of the claim. So there are wider interests in buying unsecured near 11. Also, more than 10 % of the outstanding number of the 2017 have been traded mostly in 1000(+) blocks since the second week of January. The 2013 still attract mostly tiny transactions. $ 635 M is about the entire outstanding amount of the unsecured bonds. They couldn't have bought that much unsecured bonds without driving the price way beyond 11. There is no doubt that the funds are at work here.
The thing that sucks is that the hedge fund institutional investors ALWAYS freakin win - CITI essentially bought an equivalent of the ENTIRE unsecured bond issues for 11 cents on the dollar- when almost NO other investor has been able to get anywhere near that average by legitimately buying the bonds.
I am sure the major holders of the 13/17s are pretty #$%$ by this little CITI wheel-a-deal. I can only hope they put in some SUBORDINATION CLAUSES on that unsecured claim. I am guessing the 13/17 holders average between 25-30 cents having bought after ch11. And here comes this johnny come lately screwing them.
~~That's why I am saying I d0n't kn0w wh0 kn0ws anything at K0dak.~~
If nothing else, Citi should be versed about risks in buying bad debts and they wouldn't voluntarily buy the $ 635 M claim at 11, without expecting an eventual payoff at more than 22. Actually as bad debts go, the expected payoff maybe well over 22 for Citi to justify the risks involved. This is what I infer. And it can only be positive for the 2013 and the 2017 to have Citi as the largest unsecured creditor ----- we get whatever Citi gets, pari-passu.
~~and if the retirees aren't cl0se t0 the s0urce, I d0n't kn0w wh0 is.~~
I would rather bet with Citi. EKRA isn't versed in this kind of transactions. And they may just needed the cash.
~~Basically, K0dak plans t0 st0p d0ing any significant research. IMO, that w0n't w0rk. ~~
I only want my unsecured bonds be handsomely paid upon Kodak's exit of BK. The rest isn't any of my business.
"... If nothing else, Citi should be versed about risks in buying bad debts and they wouldn't voluntarily buy the $ 635 M claim at 11, without expecting an eventual payoff at more than 22. ..."
Yup, I can follow your reasoning ... on the other hand, I was thinking/hoping the retirees and their advisors would not give up $100 Million or even $200 Million++ so close to the end without a very good reason, even if they need some cash. It's still weired for me...
"... I only want my unsecured bonds be handsomely paid upon Kodak's exit of BK. The rest isn't any of my business. ..."
... which makes sense. The bond bet is certainly the most reasonable bet that I heard for a long time as regards Kodak. I guess I'll be waiting for the right moment until it's too late ... better safe than sorry.
~~i have no information that confirms the new unsecured claims have NOT been subordinated to the bonds. It is entirely possible that is the case since the official committee of creditors signed off on the claim vis a vis the liability.~~
It is unlikely that the unsecured claims have *explicit* subordinated clauses, because the 2013 and the 2017 would have traded higher than 15, much higher. This is what the bond activities suggest. So you would have to find those *explicit* subordinated clauses to show otherwise.
~~Should such subordination indeed have occurred the upside is much greater for the bonds.~~
All the way to 100. Of course, it is fine with me, but unlikely as implied by the bond activities.
~~Do you agree the court will expect an Ev of at least 1 Billion based on the 2.5 bil revs/1.67 bil EBITDA?~~
Within the ballpark, yes. Actually EBITDA projected to be $ 0.167 B in FYE 2013.
~~Your interest payment of 100 mm pa assumes all 500 mil of secured bonds will be carried forward.~~
The newly-approved exit financing is $ 844 M, no matter how you slice and dice it, interest costs would be ~$ 100 M (rounded number).
GL to you too.
~~how do you know the claim is pari-passu the unsecured bonds?~~
All unsecured claims are pari-passu with the 2013 and the 2017, unless the terms on the unsecured claims *explicitly* stated that they are subordinated to the unsecured bonds, according to the prospectus of the 2013 and the 2017. I have posted this before twice. So unless you can find the subordinated clauses in the unsecured claims, otherwise they are all pari-passu.
~~- 800 mil left over for the unsecured claims seems about right IF you assume secureds paid off in full. I doubt that........ Even if all unsecured claims are pari passu we see 25c recovery.~~
I wrote more than 22 or more than ~$ 800 M as implied from CIti. I expect more than 30 (cash plus new equity), also posted this before.
~~Any upside is from reduced claims to UK pensions, higher newco EV and bonds higher in the waterfall.~~
It is unknown whether the UK pension will become another unsecured claim at all, but it is unlikely that the unsecured bonds may move higher in priority, as mentioned earlier. Real estates and valuation of the remaining IP may generate a combined ~$ 400 M to offset further cash burn before exiting BK. Together with retrieving foreign cash and issuing new equity, more than 30 (cash plus new equity) pari-passu for all unsecured claims.
"All unsecured claims are pari-passu with the 2013 and the 2017," If you're speaking of ALL unsecured claims, equity, and outstanding non security claims then not so much. The unsecured unsubordinated bonds rank pari passu with other similar issues but are superior to the retirees,general business claims etc. .
"The notes will be our unsecured and unsubordinated obligations and will rank equally with all of our other unsecured and unsubordinated indebtedness." Google this- Eastman Kodak 7.25% | Maturity:2013 prospectus
we are saying the same thing- i have no information that confirms the new unsecured claims have NOT been subordinated to the bonds. It is entirely possible that is the case since the official committee of creditors signed off on the claim vis a vis the liability.
Should such subordination indeed have occurred the upside is much greater for the bonds.
Do you agree the court will expect an Ev of at least 1 Billion based on the 2.5 bil revs/1.67 bil EBITDA?
Your interest payment of 100 mm pa assumes all 500 mil of secured bonds will be carried forward.
I'll take 30 as well.