Kodak 2009 Annual Report Download - page 50

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The 2017 Convertible Notes are convertible at an initial conversion rate of 134.9528 shares of the Company’s common stock per
$1,000 principal amount of convertible notes (representing an initial conversion price of approximately $7.41 per share of common
stock) subject to adjustment in certain circumstances. Upon conversion, the Company shall deliver or pay, at its election, solely
shares of its common stock or solely cash. Holders of the 2017 Convertible Notes may require the Company to purchase all or a
portion of the convertible notes at a price equal to 100% of the principal amount of the convertible notes to be purchased, plus
accrued and unpaid interest, in cash, upon occurrence of certain fundamental changes involving the Company including, but not
limited to, a change in ownership, consolidation or merger, plan of dissolution, or common stock delisting from a U.S. national
securities exchange.
Under certain circumstances, the Company may redeem the 2017 Convertible Notes in whole or in part for cash at any time on or
after October 1, 2014 and before October 1, 2016. The redemption price will equal 100% of the principal amount of the Notes to be
redeemed, plus any accrued and unpaid interest.
Refer to Note 8, “Short-Term Borrowings and Long-Term Debt,” for redemption provisions, ranking and subordination of the 2017
Convertible Notes, and events of default.
Amended Credit Agreement
On March 31, 2009, the Company and its subsidiary, Kodak Canada Inc. (together, the “Borrowers”), together with the Company’s
U.S. subsidiaries as guarantors (the “Guarantors”), entered into an Amended and Restated Credit Agreement, with the named
lenders (the “Lenders”) and Citicorp USA, Inc. as agent, in order to amend and extend its Credit Agreement dated as of October 18,
2005 (the “Secured Credit Agreement”).
On September 17, 2009, the Borrowers, together with the Guarantors, further amended the Amended and Restated Credit
Agreement with the Lenders and Citicorp USA, Inc. as agent, in order to allow collateral under this agreement to be pledged on a
second-lien basis and for the Company to issue $700 million in aggregate principal amount of debt, the net proceeds of which would
be used to repurchase its previously existing $575 million Convertible Senior Notes due 2033 as well as for other general corporate
purposes. The Amended and Restated Credit Agreement and Amendment No. 1 to the Amended and Restated Credit Agreement
dated September 17, 2009 are collectively hereinafter referred to as the “Amended Credit Agreement.” Pursuant to the terms of the
Amended Credit Agreement, the Company deposited $575 million of the net proceeds of the two financing transactions discussed
above in a cash collateral account to be used to fund the repurchase of the 2033 Convertible Notes. During 2009, the Company
repurchased $563 million of its Convertible Senior Notes due 2033. As of December 31, 2009, approximately $12 million of the
original $575 million is maintained in the cash collateral account and is considered restricted cash.
The Amended Credit Agreement provides for an asset-based revolving credit facility of up to $500 million, as further described
below. The letters of credit previously issued under the former Secured Credit Agreement continue under the Amended Credit
Agreement. Additionally, up to $100 million of the Company’s and its subsidiaries’ obligations to various Lenders under treasury
management services, hedge or other agreements or arrangements are secured by the asset-based collateral under the Amended
Credit Agreement. The Amended Credit Agreement can be used for general corporate purposes. The termination date of the
Amended Credit Agreement with respect to the Lenders who agreed to the extension, and any future lenders, is March 31, 2012,
and with respect to the other Lenders continues to be October 18, 2010. As of December 31, 2009, approximately 75% of the facility
amount has been extended to the 2012 termination date, and additional lenders may be added to increase this amount.
Advances under the Amended Credit Agreement will be available based on the Borrowers’ respective borrowing base from time to
time. The borrowing base is calculated based on designated percentages of eligible accounts receivable, inventory, machinery and
equipment and, once mortgages are recorded, certain real property, subject to applicable reserves. As of December 31, 2009, based
on this borrowing base calculation and after deducting the face amount of letters of credit outstanding of $136 million and $100
million of collateral to secure other banking arrangements, the Company had $201 million available to borrow under the Amended
Credit Agreement.
The Amended Credit Agreement provides that advances made from time to time will bear interest at applicable margins over the
Base Rate, as defined, or the Eurodollar Rate. The Company pays, on a quarterly basis, an annual fee ranging from 0.50% to 1.00%
to the Lenders based on the unused commitments.
As of December 31, 2009, the Company had no debt for borrowed money outstanding under the Amended Credit Agreement, but
had outstanding letters of credit of $136 million. In addition to the letters of credit outstanding under the Amended Credit Agreement,
there were bank guarantees and letters of credit of $30 million and surety bonds of $28 million outstanding under other banking
arrangements primarily to ensure the payment of possible casualty and workers' compensation claims, environmental liabilities, legal
contingencies, rental payments, and to support various customs and trade activities.