Kodak denies bankruptcy plan

Once synonymous with photography,Kodak has struggled with the move to digital cameras and failed to turn a profit since 2007. It has been exploring a sale of its digital imaging patents,worth an estimated 2 billion,and hired investment bank Lazard in July to explore options.

Rochester,New York-based Kodak said it has 8220;no intention of filing for bankruptcy,8221; after its shares plunged as much as 68 percent to 54 cents before recovering slightly to close down 53.8 percent at 78 cents on the New York Stock Exchange.

The company8217;s market value plummeted to roughly 210 million on Friday,down from a lofty height of 31 billion in February 1997,as shown by regulatory filings. The cost to insure Kodak8217;s debt with credit default swaps CDS surged on Friday as investors priced in greater bankruptcy risk.

Kodak had already scared markets on Monday when it tapped a credit line but refused to divulge its cash position. The stock dived to a 38-year low that day.

Then investors took fright again Friday after Bloomberg reported that potential buyers for its patent portfolio were cautious about going ahead with a bid as they could risk having Kodak creditors sue them after a bankruptcy filing.

Mark Kaufman,an analyst at Rafferty Capital Markets,said that Kodak urgently needed to seal a patent deal.

8220;I don8217;t believe bankruptcy is inevitable. This is a pretty valuable portfolio,they should get a good price,8221; he said. 8220;They need to get this sale out of the way. They need to sell this portfolio,raise some type of cash.8221;

The company said in July that it hired Lazard to advise on strategic options for its patents 8212; increasingly seen as lucrative assets. Bankrupt Canadian company Nortel fetched 4.5 billion in a patent sale in June,also run by Lazard. Google Inc agreed in August to buy Motorola Mobility for 12.5 billion primarily for its patent portfolio.

One expert 8212; Robert Miller,a professor at Villanova University School of Law 8212; said filing for bankruptcy may actually end up boosting the value of a patent sale.

Even if the company holds a robust,public auction outside of bankruptcy,the headache of litigation still looms if Kodak goes bankrupt later,said Miller.

Selling the assets as part of a bankruptcy court-supervised auction would solve that concern,Miller said.

Kodak confirmed that it has hired Jones Day but did not explain why,beyond saying it was 8220;not unusual for a company in transformation to explore all options.8221;

Investors for the company have been up in arms about everything from its share price decline to its management.

One shareholder had asked the company8217;s board on Thursday to start a sales process while others sharply criticized Chief Executive Antonio Perez.

The company8217;s board is not considering replacing Perez at this time,according to a story in the Wall Street Journal,which cited two people familiar with the matter.

Kodak CDS costs rose to 70 percent Friday from 61 percent Thursday,data provider Markit said. That means it would cost 7.0 million in upfront payments,plus 500,000 a year to insure 10 million debt if Kodak debt for five years.

8220;This is pretty expensive insurance at this point and the reason it8217;s so expensive is that people believe there8217;s a high likelihood of default,8221; said Markit analyst Otis Casey.