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Report: Citigroup to provide Kodak bankruptcy funds

Ailing imaging company in "advanced talks" with Citigroup for bankruptcy financing of about US$1 billion though terms may change, report states.
Written by Ellyne Phneah, Contributor on

Citigroup is in "advanced talks" with Kodak to provide the bankruptcy financing needed should the company seek protection from creditors, Bloomberg reported.

In a report on Saturday, the news agency stated that Kodak may look to file for bankruptcy within weeks and subsequently hold an auction to sell its patent portfolio, citing three people who were familiar with the matter. The beleaguered imaging giant may seek about US$1 billion in so-called debtor-in-possession financing to keep its operations afloat while the auction is carried out, though terms may change, two of the sources added.

The other said advisers to Kodak are lining up a "stalking horse bidder", or frontrunner, for the patent portfolio should the company file for bankruptcy.

"There is a heightened probability that Kodak will file for bankruptcy in order to improve its prospects of achieving more favorable terms in the licensing or sale of its digital patents," Richard Lane, analyst at Moody's, told Bloomberg. "Kodak needs material, near-term liquidity support, otherwise, our analysis shows Kodak will run out of domestic liquidity by mid-2012."

Spokespeople from Kodak and Citigroup declined to comment when approached by Bloomberg.

IDC's research manager for its worldwide digital imaging practice Christopher Chute had earlier pointed out that Kodak's lack of presence outside the U.S. market and brand strength in high-end cameras, as well as slow transition to become more of a printing vendor have all contributed to its continuing demise.

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