Kodak 2011 Annual Report Download - page 79

The 2017 Convertible Notes are the Company’s senior unsecured obligations and rank: (i) senior in right of payment to the Company’s existing and
future indebtedness that is expressly subordinated in right of payment to the 2017 Convertible Notes; (ii) equal in right of payment to the Company’s
existing and future unsecured indebtedness that is not so subordinated; (iii) effectively subordinated in right of payment to any of the Company’s secured
indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally subordinated to all existing and future indebtedness
and obligations incurred by the Company’s subsidiaries including guarantees of the Company’s obligations by such subsidiaries.
Certain events are considered events of default and may result in the acceleration of the maturity of the 2017 Convertible Notes including, but not limited
to: default in the payment of principal or interest when it becomes due and payable; failure to comply with an obligation to convert the 2017 Convertible
Notes; not timely reporting a fundamental change; events of bankruptcy; and non
-compliance with other provisions and covenants and other forms of
indebtedness for borrowed money. 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 2017 Convertible Notes. The creditors are, however, stayed from taking any action as a
result of the default under Section 362 of the Bankruptcy Code.
Senior Notes due 2013
On October 10, 2003, the Company completed the offering and sale of $500 million aggregate principal amount of Senior Notes due 2013 (the “2013
Notes
”), which was made pursuant to the Company's shelf registration statement on Form S-3 effective September 19, 2003. Interest on the 2013 Notes
will accrue at the rate of 7.25% per annum and is payable semiannually. The 2013 Notes are not redeemable at the Company's option or repayable at the
option of any holder prior to maturity. The 2013 Notes are unsecured and unsubordinated obligations, and rank equally with all of the Company’s other
unsecured and unsubordinated indebtedness.
On March 10, 2010, the Company accepted for purchase $200 million aggregate principal amount of the Senior Notes due 2013 (2013 Notes) pursuant to
the terms of a tender offer that commenced on February 3, 2010.
On March 15, 2011, the Company repurchased $50 million aggregate principal amount of the 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.
The Bankruptcy Filing constituted an event of default with the 2013 Senior Notes. The creditors are, however, stayed from taking any action as a result of
the default under Section 362 of the Bankruptcy Code.
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 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
77