Kodak 2011 Annual Report Download - page 48

The 2019 Senior Secured Notes are the Company’s senior secured obligations and rank senior in right of payment to any future subordinated
indebtedness; rank equally in right of payment with all of the Company’s existing and future senior indebtedness; are effectively senior in right of
payment to the Company’s existing and future unsecured indebtedness; are effectively subordinated in right of payment to indebtedness under the
Company’s Second Amended Credit Agreement (as defined below) to the extent of the collateral securing such indebtedness on a first-priority basis; and
effectively are subordinated in right of payment to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries.
Certain events are considered events of default and may result in the acceleration of the maturity of the 2019 Senior Secured Notes, including, but not
limited to (subject to applicable grace and cure periods): default in the payment of principal or interest when it becomes due and payable; failure to
purchase Senior Secured Notes tendered when and as required; events of bankruptcy; and non-compliance with other provisions and covenants and the
acceleration or default in the payment of principal of certain other forms of debt. If an event of default occurs, the aggregate principal amount and
accrued and unpaid interest may become due and payable immediately.
The Bankruptcy Filing constituted an event of default with the 2019 Senior Secured Notes. The creditors are, however, stayed from taking any action as
a result of the default under Section 362 of the Bankruptcy Code.
Second Lien Holders Agreement
On February 14, 2012, the Company reached an adequate protection agreement with a group representing at least 50.1% of the Second Lien Note
Holders (2019 Senior Secured Note Holders and 2018 Senior Secured Note Holders) which was reflected in the Final DIP Order. The Company agreed,
among other things, to provide all Second Lien Note Holders with a portion of the proceeds received from certain sales and settlements in respect of the
Company’s digital imaging portfolio subject to the following waterfall and the Company's right to retain a percentage of certain proceeds under the DIP
Credit Agreement: first, to repay any outstanding obligations under the DIP Credit Agreement, including cash collateralizing letters of credit (unless the
certain parties otherwise agree); second, to pay 50% of accrued second lien interest at the non-default rate; third, the Company retains $250 million;
fourth, to pay 50% of accrued second lien interest at the non-default rate; fifth, any remaining proceeds up to $2,250 million to be split 60% to the
Company and 40% to repay outstanding second lien debt at par; and sixth, the Company agreed that any proceeds above $2,250 million will be split 50%
to the Company and 50% to Second Lien Note Holders until second lien debt is fully paid. The Company also agreed to pay current interest to Second
Lien Note Holders upon the receipt of $250 million noted above. Subject to the satisfaction of certain conditions, the Company also agreed to pay
reasonable fees of certain advisors to the Second Lien Note Holders.
Repurchase of Senior Notes due 2013
On March 15, 2011, the Company repurchased $50 million aggregate principal amount of Senior Notes due 2013 (2013 Notes) at par using proceeds from
the issuance of the 2019 Senior Secured Notes. As of December 31, 2011, $250 million of the 2013 Notes remain outstanding.
Second Amended and Restated Credit Agreement
On April 26, 2011, the Company and its subsidiary, Kodak Canada, Inc. (together the “Borrowers”), together with the Company’s U.S. subsidiaries as
guarantors (Guarantors), entered into a Second Amended and Restated Credit Agreement (Second Amended Credit Agreement), with the named lenders
(Lenders) and Bank of America, N.A. as administrative agent, in order to amend and extend its Amended and Restated Credit Agreement dated as of March
31, 2009, as amended (Amended Credit Agreement).
The Second Amended Credit Agreement provides for an asset-based Canadian and U.S. revolving credit facility (Credit Facility) of $400 million ($370
million in the U.S. and $30 million in Canada), as further described below, with the ability to increase the aggregate amount. Additionally, up to $125
million of the Company’s and its subsidiaries’ obligations to Lenders under treasury management services, hedge or other agreements or arrangements can
be secured by the collateral under the Credit Facility. The Credit Facility can be used for ongoing working capital and other general corporate
purposes. The termination date of the Credit Facility is the earlier of (a) April 26, 2016 or (b) August 17, 2013, to the extent that the 2013 Notes have not
been redeemed, defeased, or otherwise satisfied by that date.
On September 23, 2011, the Company initiated a draw of $160 million under the Second Amended Credit Agreement for general corporate
purposes. During the fourth quarter of 2011, the Company repaid $60 million under the Second Amended Credit Agreement. The revolving credit advance
bears interest at applicable margins over the Base Rate, as defined in the Second Amended Credit Agreement. The borrowing will bear interest initially at
1.5% (the applicable margin) plus the Base Rate, which fluctuates daily based on the highest of the following reference rates: the Federal Funds Rate plus
0.5%, Bank of America’s prime rate, and a one-month Eurodollar rate plus 1.0%. The Company
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