Kodak 2011 Annual Report Download - page 49

may repay the advances at any time without penalty, subject to certain conditions if the advances have been converted to a Eurodollar rate.
Advances under the Second Amended Credit Agreement are 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, and machinery and equipment, subject to
applicable reserves. As of December 31, 2011, based on this borrowing base calculation and after deducting $100 million of outstanding borrowings under
the agreement, the face amount of letters of credit outstanding of $96 million and $63 million of collateral to secure other banking arrangements, the
Company had $71 million available to borrow under the Second Amended Credit Agreement.
Under the terms of the Credit Facility, 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 Credit Facility borrowing base formula falls below the greater of (a) $40 million or (b)
12.5% of the commitments under the Credit Facility at any time (Trigger), 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 the Trigger for 30 consecutive days. As of December 31, 2011, the Company’s fixed
charge coverage ratio was less than 1.1 to 1.0; however, as of December 31, 2011, excess availability was greater than the Trigger. The $100 million
principal outstanding as of December 31, 2011 is recorded within short-term borrowings and current portion of long-term debt within the Company’s
Consolidated Statement of Financial Position. 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 Second
Amended Credit Agreement. The Company was in compliance with all covenants under the Credit Facility as of December 31, 2011.
In addition to the Second Amended Credit Agreement, the Company has other committed and uncommitted lines of credit as of December 31, 2011 totaling
$17 million and $65 million, respectively. These lines primarily support operational and borrowing needs of the Company’s subsidiaries, which include
term loans, overdraft coverage, revolving credit lines, letters of credit, bank guarantees and vendor financing programs. Interest rates and other terms of
borrowing under these lines of credit vary from country to country, depending on local market conditions. As of December 31, 2011, usage under these
lines was approximately $24 million, all of which were supporting non-debt related obligations.
The Credit Facility contains events of default customary in similar asset based lending facilities. If an event of default occurs and is continuing, the
Lenders may decline to provide additional advances, impose a default rate of interest, declare all amounts outstanding under the Credit Facility
immediately due and payable, and require cash collateralization or similar arrangements for outstanding letters of credit.
The Bankruptcy Filing constituted an event of default with the Second Amended and Restated Credit Agreement. On January 20, 2012, the Company
repaid, refinanced, or transferred all obligations and terminated all commitments under the Second Amended and Restated Credit Agreement in
connection with entering into and drawing funds from the Debtor-in-Possession Revolving Credit Agreement.
Debtor
-in-Possession Credit Agreement
In connection with the Bankruptcy Filing, on January 20, 2012, the Company and Kodak Canada Inc. (the “Canadian Borrower” and, together with the
Company, the “Borrowers”) entered into a Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) with certain subsidiaries of the Company
and the Canadian Borrower signatory thereto (“Subsidiary Guarantors”), the lenders signatory thereto (the “Lenders”), Citigroup Global Markets Inc., as
sole lead arranger and bookrunner, and Citicorp North America, Inc., as syndication agent, administration agent and collateral agent (the
“Agent”).
Pursuant to the terms of the DIP Credit Agreement, the Lenders agreed to lend in an aggregate principal amount of up to $950 million, consisting
of up to $250 million super-priority senior secured asset-based revolving credit facilities and an up to $700 million super-priority senior secured term loan
facility (collectively, the “Loans”). Up to $25 million of the revolving credit facilities will be available to the Canadian Borrower and may be borrowed in
Canadian Dollars. The Company and each existing and future direct or indirect U.S. subsidiary of the Company (other than indirect U.S. subsidiaries held
through foreign subsidiaries and certain immaterial subsidiaries (if any)) (the “U.S. Guarantors”) have agreed to provide unconditional guarantees of the
obligations of the Borrowers under the DIP Credit Agreement. In addition, the U.S. Guarantors, the Canadian Borrower and each existing and future direct
and indirect Canadian subsidiary of the Canadian Borrower (other than certain immaterial subsidiaries (if any)) (the “Canadian Guarantors” and, together
with the U.S. Guarantors, the “Guarantors”) have agreed to provide unconditional guarantees of the obligations of the Canadian Borrower under the DIP
Credit Agreement. Under the terms of the DIP Credit Agreement, the Company will have the option to have interest on the loans provided thereunder
accrue at a base rate or the then applicable LIBOR Rate (subject to certain adjustments and, in the case of the term loan facility, a floor of 1.00%), plus a
margin, (x) in the case of the revolving loan facility, of 2.25% for a base rate revolving loan or 3.25% for a LIBOR rate revolving loan, and (y) in the case
of the term loan facility, of 6.50% for a base rate loan and 7.50% for a LIBOR Rate loan. The
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