Kodak 2009 Annual Report Download - page 78

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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 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. In October 2009, the Company
completed a tender offer to purchase any and all of its outstanding 3.375% Convertible Senior Notes due 2033 (the “2033
Convertible Notes”) for an amount in cash equal to 100% of the principal amount of the 2033 Convertible Notes, plus accrued and
unpaid interest. As a result of the tender offer, approximately $563 million of the 2033 Convertible Notes were repurchased. The
remaining amount in the cash collateral account was approximately $12 million as of December 31, 2009 and is considered
restricted cash, which is included in Other current assets in the accompanying Consolidated Statement of Financial Position.
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.
The obligations of the Borrowers are secured by liens on substantially all of their non-real estate assets and by a pledge of 65% of
the stock of certain of the Company’s material non-U.S. subsidiaries, pursuant to Amended and Restated U.S. and Canadian
Security Agreements. In addition, the Company may mortgage certain U.S. real property for inclusion in the borrowing base for
advances under the Amended Credit Agreement. The security interests are limited to the extent necessary so that they do not trigger
the cross-collateralization requirements under the Company’s indenture with Bank of New York as trustee, dated as of January 1,
1988, as amended by various supplemental indentures.
Under the terms of the Amended Credit Agreement, the Company has agreed to certain affirmative and negative covenants
customary in similar asset-based lending facilities. In the event the Company’s excess availability under the borrowing base formula
under the Amended Credit Agreement falls below $100 million for three consecutive business days, among other things, the
Company must maintain a fixed charge coverage ratio of not less than 1.1 to 1.0 until the excess availability is greater than $100
million for 30 consecutive days. As of December 31, 2009, excess availability was greater than $100 million. The Company is also
required to maintain cash and cash equivalents in the U.S. of at least $250 million. The negative covenants limit, under certain
circumstances, among other things, the Company’s ability to incur additional debt or liens, make certain investments, make
shareholder distributions or prepay debt, except as permitted under the terms of the Amended Credit Agreement. The Company was
in compliance with all covenants under the Amended Credit Agreement as of December 31, 2009.