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Post by littletulip on Jun 14, 2013 15:06:20 GMT -5
Anybody notice that the Official Committee of the Unsecured Creditors has not objected to the POR or the KPP deal. The only objections other than people from this board, a few retirees (not the Official Retiree Committee),and a few other misc. individuals are from the participants in the Digital Patents who want to make sure that their rights hold in the deals (that is why they are limited objections), STWD (Sterling Wint. that Kodak sold to Bayer) who is really concerned with environmental liabilities that Kodak said they would cover (in NJ, this was noted in detail in the POR) and Canon who has a very broad IP cross license with Kodak that has been in place for many years (covers almost all technologies) who is concerned with their rights being preserved. It appears that the Unsecured Committee is working with Kodak to get the KPP deal and the POR done. The request for funding to pay for Buck links to this. I suspect that the IP stuff will be settled very rapidly without any problems. The STWD environmental will end up as an unsecured or will be taken care of by the range of environmental settlements Kodak is working on, this is really a big deal since all land that was involved with the manufacturing of silver halide film is basically unsalable to anyone unless they are assured that the EPA or the equivalent UK entity will not come after them. Remember that Kodak was using solvents and heavy metals as well as other hazardous materials for almost 100 years before the EPA was even in existence. Note that EBP is unlikely to ever be sold to (or just taken over by)anyone other than the state of NY because of these issues. The retiree issues will end up being a big nothing, that is the KURIP/KERIP issue by Greco et. al. will end up where they are now as just another unsecured creditor.
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Post by youseekyoda on Jun 14, 2013 15:10:36 GMT -5
Have you looked at the pages and pages of objections?
If not, look at this one
Doc 4013 says quite a bit as well along with some teeth considering the size of the creditor. There are so many objections to the KPP deal and POR I am not sure how the judge can ignore this. I also agree that a court ordered independent valuation seems like the only path as Kodak's financial information is highly suspect. IF we are going to loose our share value, let's at least have fair and accurate information
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Post by littletulip on Jun 14, 2013 15:42:20 GMT -5
STWD is the objector in 4013, I noted that in my post. STWD changed their claim from an unliquidated claim to a specific amount based on covering as much of their butt as possible and then more from cleaning up the river in NJ. They threw in everything but the kitchen sink in their objection,including the false statement that there was not an auction for DI and PI (read the Earnst & Young documents to see the full extent of what was done.). The Unsecured Committee was fully involved with the DI and PI sales attempt,the KPP deal, the IP sale etc. If Kodak resolves the environmental issue with a trust fund or a settlement with NJ, STWD will go away.
If I were Kodak I would be concerned if they can not get the Official Committee of the Unsecured on board.If they have them or get them on board this will wrap up fast.
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Post by littletulip on Jun 14, 2013 15:47:17 GMT -5
Note what was done with DI and PI was the Stalking Horse not the final auction but Kodak and the unsecured creditor committee clearly got a good indication that the KPP deal was by far and away the best they could do. Note the Stalking Horse for DI was just over $200M and PI would clearly sell for less (AgX based other than Kiosks). This amount would not have settled KPP and the UK portion of Kodak and maybe much of EK Europe would have fallen into insolvency (the $300M of cash there would have been frozen by the UK government.Kodak really lucked out with the KPP deal.
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Post by youseekyoda on Jun 14, 2013 16:01:44 GMT -5
How do you know this when no asset valuation was disclosed. That would make far for than that keeping this 2 divisions and paying the $50m annual pension payment
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Post by williedraton on Jun 14, 2013 16:14:37 GMT -5
Wouldn't the unsecureds do better to just push for liquidation as opposed to accepting the plan? Use the cash on hand to pay off the $400 million in secured and then the remaining proceeds would go to unsecured which is what the pension plans would be. I am sure with over $1 billion in cash, the recovery for unsecured would be better than the current plan which provides unsecured with pennies on the dollar. The pension plans might not get the great deal they are currently going to get, but unsecureds as a whole would get a better recovery. Is this not right?
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Post by littletulip on Jun 14, 2013 16:47:07 GMT -5
It is highly unlikely that the unsecured would do better in Chapter 7. 1.) there is $1.3B of secured debt 2.) Kodak burnt through $100M of cash in April,lets say it takes 6 moths to liquidate and they only burn $50M per month, so they are down to $700M by the end of the 6 month. 3.) The approx $300M of cash in Europe will never get out of Europe if the KPP transaction does not go through. KPP will get that and at least the UK would go insolvent and probably the rest of Europe. That will make it very difficult to sell any business that has business in Europe. Also it only then leaves $400M of cash at the end of the Chapter 7 process, at best. 4.) will not be able to sell patents separately from the businesses,if they do they will get almost nothing for the businesses, they would be exposed to patent suits from competitors, if the businesses have sole possession of the patents then they can counter sue if the patents are sold to others and say that company sues a competitor in commercial print and then the sued company goes after the former Kodak commercial print the former Kodak commercial print does not have the defense since the company that bought the patents is suing the competitor already. There may be some patents not tied to a business that could be sold. 5.) The businesses would now be for sale in a very distressed situation,which may include a melt down in Europe. The commercial IJ business was bought from Scitex for $250M,it was profitable and growing, it is now unprofitable and growing about the same rate. But lets say they can get $250M, The NexPress Business was sold to Kodak for 0,it is older now and much of the business (B&W) is shrinking. Still 0 if it can be sold. The Plate Business is now smaller and less profitable when Kodak bought it and again distressed and maybe a mess in Europe,lets say $500M. The motion Picture business and other films are shrinking fast and may not be salable,Fuji got out of the business, lets say $100M for all the remaining film. Lets also say that they can still get $200M for DI and 1/2 that for PI,that is in the face of the business maybe not salable in Europe for 1 year or more if then. Land at EBP and Harrow at 0,super fund sites that no one in their right mind would take on. Lets say $200M for misc. patents. 6.) total cash at end $1.35B, and secured at $1.3B. 7.) The PBGC is waiting with a $1.3B unsecured claim that is not in the POR because you have Kodak as ongoing, The KPP claim would be $2.8B-$.3B (cash in Europe) = $2.5B,plus the $.65B OPEB claim,plus the other $1.9B approx. unsecured. I believe that I may be generous with what they could actually get for businesses in extreme distress, Europe maybe unsalable (US courts can not help with that if the KPP deal falls through)and the length of time to wrap it up (6 months), and the cash burn per month could be much higher if Europe gets tied up by KPP and customers around the world see the distressed selling and mess in Europe. Another alternative is selling the patents and trying to sell the businesses uncovered by the patents. Do not forget that AgX patents, EP patents and plate patents may have little to no value given the competition, the size of them,their patent portfolios and the cross licensing that already exists. The commercial IJ patents would be a tough sell given the competition is very large and has their own IJ technology (HP thermal and others piezo.)
The best hope for all is that Kodak can get healthy and grow their business profitably and not have to sell the assets in a distressed sale with Europe in chaos.
Also someone else asked why does Kodak not just keep paying KPP $50M a year (with higher payments in the future), the problem is that if you look at their P&L and cashflow and assume they will deliver they can not affordto pay that and have any buffer if something goes wrong. I do not believe KPP would accept that risk and the US judge can not force them to accept that.
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Post by goldentouch on Jun 14, 2013 17:01:52 GMT -5
The unsecured will more than likely end up with all the shares in Kodak. That is why they are trading in the 17 level.
Based on the POR 445 million(for the whole company) divided by 2.7 billion (estimate 2.2-2.7 billion in unsecureds so lets say worst case senerio)= 16.5 a bond.
Any change in valuation will just end up giving the bondholders more on exiting BK.
Willie- I don't think a company with 1 billion in cash and only 675 million in debt can be valued at 445 million. The valuation is WAY WAY off. But I do not believe that the valuation is off by approximately 2 billion (maybe 1 billion or so).
Bottom line, no body knows anything for a fact. Anyone that tells you otherwise is full of shit.
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Post by williedraton on Jun 14, 2013 17:03:44 GMT -5
Thanks for your response. However, I didn't see a value for the patents in your explanation.
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Post by littletulip on Jun 14, 2013 17:16:52 GMT -5
Note that the $440M is the book value,it is very close to the discounted cashflow from emergence to 2017. Using a discount rate of around 16% which is close to the cost of capital for Kodak given the rate on the bonds. The book value will not reflect a full DCF analysis of the company, but if you do a full DCF the set of assumptions to calculate the terminal value are very very open to debate. One could even argue that Kodaks forecasts for 2014 to 2017 are somewhat challenging. Somewhat of a hockey stick form to them. Also note that the cash on hand at emergence is about $815M see page F 1 of the Disclosure Statement. Note this down from about $1B at the end of April,but Kodak did burn through $100M of cash in April alone. Patents can not show up on the Balance sheet as an asset, they have already been expensed, also as I noted in an earlier note if you separate the patents from the businesses that use the patents the businesses lose much of the value you could get in selling them.
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Post by goldentouch on Jun 14, 2013 17:18:56 GMT -5
Willie- you need to understand that in every chapter 11 there are shareholders that cry and say that there was value and the bondholders stole the company away from the shareholders.
I was not in WAMU but in that chapter 11 there was 2 billion in shareholder equity and the shareholders got wiped out.
In exide (the first chapter 11) there was shareholder equity ON THE BOOKS (not off like in kodaks current case) and shareholders got wiped.
The list goes on and on and for every 1 GGP of pilgrims pride there are 20 exides and wamu examples.
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Post by def1metk on Jun 14, 2013 17:31:53 GMT -5
Again, you are cherry picking, littleT. The two divisions are making 150M a year. When you out their high priced lawyers out of the play, the Kodak portion under bankruptcy will be almost breaking even. There is a objection filed by the unsecureds against the POR as filed is very lacking on information. Kodak under bankruptcy has been filing court documents that are redacted and pertinent information blacked out. This POR is a insult to basic intelligence and the KPP>>>>>>http://finance.yahoo.com/mb/EKDKQ/#mbt=Did%2520ANYBODY%2520ac%25u2026&mbl=http%253A%2F%2Ffinance.yahoo.com%2Fmbview%2Fthreadview%2F%253F%2526bn%253D0b0d9f80-b903-3aff-a4ea-77eede16e619%2526tid%253D1370305084133-f37edd60-44f8-4938-bec8-942167e35b6d%2526tls%253Dla%25252Cd%25252C5%25252C3&mbtc=mb-tab-topic<<<<< deal is full of holes. What kodak is trying to do can even be proven to be criminal.
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Post by williedraton on Jun 14, 2013 17:49:20 GMT -5
What are the revenue projections for the retained patents that Kodak licensed with the DI/KISS sale? Kodak has at least 7500 remaining patents (using the absolute lowest numbers) and this portfolio is clearly Kodak 's most valuable asset, so I ask again, what is the projected revenue for Kodak 's most valuable remaining asset?
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Post by dmdmd1 on Jun 14, 2013 18:26:27 GMT -5
Willie- you need to understand that in every chapter 11 there are shareholders that cry and say that there was value and the bondholders stole the company away from the shareholders. I was not in WAMU but in that chapter 11 there was 2 billion in shareholder equity and the shareholders got wiped out. In exide (the first chapter 11) there was shareholder equity ON THE BOOKS (not off like in kodaks current case) and shareholders got wiped. The list goes on and on and for every 1 GGP of pilgrims pride there are 20 exides and wamu examples. Golden, I was a Wamu shareholder and commons did not get wiped out! We fought and the bond holders/hedge funds settled with shareholders due to insider trading allegations!
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Post by goldentouch on Jun 14, 2013 18:26:50 GMT -5
Willie- what is your revenue projection?
How much are they licensing them for currently?
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Post by goldentouch on Jun 14, 2013 18:27:48 GMT -5
dmd- where you a common holder or a preffered?
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Post by dmdmd1 on Jun 14, 2013 18:29:39 GMT -5
dmd- where you a common holder or a preffered? I owned both, the equity committee represented preferred and common shares.
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Post by williedraton on Jun 14, 2013 21:24:10 GMT -5
Willie- what is your revenue projection? How much are they licensing them for currently? Golden, that's my point. Nobody knows and its Kodak 's most valuable asset.
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fufat
Junior Member
Posts: 194
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Post by fufat on Jun 14, 2013 21:36:31 GMT -5
Note that the $440M is the book value,it is very close to the discounted cashflow from emergence to 2017. Using a discount rate of around 16% which is close to the cost of capital for Kodak given the rate on the bonds. The book value will not reflect a full DCF analysis of the company, but if you do a full DCF the set of assumptions to calculate the terminal value are very very open to debate. One could even argue that Kodaks forecasts for 2014 to 2017 are somewhat challenging. Somewhat of a hockey stick form to them. Also note that the cash on hand at emergence is about $815M see page F 1 of the Disclosure Statement. Note this down from about $1B at the end of April,but Kodak did burn through $100M of cash in April alone. Patents can not show up on the Balance sheet as an asset, they have already been expensed, also as I noted in an earlier note if you separate the patents from the businesses that use the patents the businesses lose much of the value you could get in selling them. So in other words with all of Kodaks' high technology printing, new strategic partnerships that are not on the books, land and machinery, over 120 foreign owned companies, over a Billion in cash a multitude of raw minerals like silver(300Mil worth), a plethora of industry used patents spanning many areas and I believe there's more.... After all these assets the fresh start accounting comes up with Kodak only worth 441 Million dollars!!! There's definitely something wrong here!!!! According to bankruptcy law that is stated in the POR, any proceeds from any sale of assets, IP or trademark names have to go toward an order of loan repayment. Secured loans get paid in full if any cash left then to unsecured junior loans. That's the LAW!!!! So the proceeds from the digital/KISS patents the 525Mil by law should of been used in paying down loan debt. And now according to this BS POR the 325MIL Kodak would be receiving from KPP for the 2 businesses almost paids off the 375MIL Secureds so that class should be paid off 100% and out of the way. Too many unknowns at the moment for anyone on this board to truly understand what will happen in the end, thanks to the countless redacted documents that are the real puzzles pieces to this picture
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fufat
Junior Member
Posts: 194
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Post by fufat on Jun 14, 2013 22:01:39 GMT -5
It is highly unlikely that the unsecured would do better in Chapter 7. 1.) there is $1.3B of secured debt 2.) Kodak burnt through $100M of cash in April,lets say it takes 6 moths to liquidate and they only burn $50M per month, so they are down to $700M by the end of the 6 month. 3.) The approx $300M of cash in Europe will never get out of Europe if the KPP transaction does not go through. KPP will get that and at least the UK would go insolvent and probably the rest of Europe. That will make it very difficult to sell any business that has business in Europe. Also it only then leaves $400M of cash at the end of the Chapter 7 process, at best. 4.) will not be able to sell patents separately from the businesses,if they do they will get almost nothing for the businesses, they would be exposed to patent suits from competitors, if the businesses have sole possession of the patents then they can counter sue if the patents are sold to others and say that company sues a competitor in commercial print and then the sued company goes after the former Kodak commercial print the former Kodak commercial print does not have the defense since the company that bought the patents is suing the competitor already. There may be some patents not tied to a business that could be sold. 5.) The businesses would now be for sale in a very distressed situation,which may include a melt down in Europe. The commercial IJ business was bought from Scitex for $250M,it was profitable and growing, it is now unprofitable and growing about the same rate. But lets say they can get $250M, The NexPress Business was sold to Kodak for 0,it is older now and much of the business (B&W) is shrinking. Still 0 if it can be sold. The Plate Business is now smaller and less profitable when Kodak bought it and again distressed and maybe a mess in Europe,lets say $500M. The motion Picture business and other films are shrinking fast and may not be salable,Fuji got out of the business, lets say $100M for all the remaining film. Lets also say that they can still get $200M for DI and 1/2 that for PI,that is in the face of the business maybe not salable in Europe for 1 year or more if then. Land at EBP and Harrow at 0,super fund sites that no one in their right mind would take on. Lets say $200M for misc. patents. 6.) total cash at end $1.35B, and secured at $1.3B. 7.) The PBGC is waiting with a $1.3B unsecured claim that is not in the POR because you have Kodak as ongoing, The KPP claim would be $2.8B-$.3B (cash in Europe) = $2.5B,plus the $.65B OPEB claim,plus the other $1.9B approx. unsecured. I believe that I may be generous with what they could actually get for businesses in extreme distress, Europe maybe unsalable (US courts can not help with that if the KPP deal falls through)and the length of time to wrap it up (6 months), and the cash burn per month could be much higher if Europe gets tied up by KPP and customers around the world see the distressed selling and mess in Europe. Another alternative is selling the patents and trying to sell the businesses uncovered by the patents. Do not forget that AgX patents, EP patents and plate patents may have little to no value given the competition, the size of them,their patent portfolios and the cross licensing that already exists. The commercial IJ patents would be a tough sell given the competition is very large and has their own IJ technology (HP thermal and others piezo.) The best hope for all is that Kodak can get healthy and grow their business profitably and not have to sell the assets in a distressed sale with Europe in chaos. Also someone else asked why does Kodak not just keep paying KPP $50M a year (with higher payments in the future), the problem is that if you look at their P&L and cashflow and assume they will deliver they can not affordto pay that and have any buffer if something goes wrong. I do not believe KPP would accept that risk and the or this reoranUS judge can not force them to accept that. I have to disagree with you when you talk about the KKP 50MI/YR. deal. Kodak will be paying over a BILLION in legal and analysts fees. Once they don't have to pay for this and also the DIP financing they could easily drop 50 Million a year hell they could drop a 100 Million without blinking an eye. There monthly MOR's show they are in the red because of all their payments to these vultures, if they didn't have to paid for this reorganization Kodak would be in the green as in cash. Think about it, if your not paying a Billion dollars your saving a Billion dollars. As for the judge not allowing this KKP deal for 50Mil a year then 90Mil, I believe this was a deal already agreed upon and in place way back before Kodak filed for Chapter 11 PROTECTION! So the judge would have no say if the deal was already active and Kodak was funding it up until the chapter 11.
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Post by Admin on Jun 15, 2013 8:15:39 GMT -5
What is LT talking about?
Didn't the Unsecured object and are now having their own Actuarial specialists evaluate the assets and liabilities of the KPP Pension and the DI and PI businesses? I believe this was from May 1st if I remember correctly from a docket.
SBG
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Deleted
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Post by Deleted on Jun 15, 2013 10:05:48 GMT -5
What is LT talking about? Didn't the Unsecured object and are now having their own Actuarial specialists evaluate the assets and liabilities of the KPP Pension and the DI and PI businesses? I believe this was from May 1st if I remember correctly from a docket. SBG They did request for actuarial assistance in evaluating the pension obligations. As far as I know they have not filed an objection to the sale as the official unsecured committee. www.kccllc.net/documents/1210202/1210202130603000000000024.pdf
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