Kodak 2011 Annual Report Download - page 80

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. It is the Company’s
intent to repay its borrowings as necessary to avoid falling below the required threshold. 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. The creditors are, however, stayed from
taking any action as a result of the default under Section 362 of the Bankruptcy Code. On January 20, 2012, the Company repaid 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 as amended on January 25, 2012 (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 an up to $250 million super-priority senior secured asset-based revolving credit facility and an up to $700 million super-priority
senior secured term loan facility (collectively, the “Loans”). A portion of the revolving credit facility will be available to the Canadian Borrower and may
be borrowed in Canadian Dollars. The DIP Credit Agreement was approved on February 15, 2012 by the Bankruptcy Court.
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 obligations of the Borrowers and the Guarantors under the DIP Credit
Agreement are secured by a first-priority security interest in and lien upon all of the existing and after-acquired personal property of the Company and the
U.S. Guarantors, including pledges of all stock or other equity interest in direct subsidiaries owned by the Company or the U.S. Guarantors (but only up to
65% of the voting stock of each direct foreign subsidiary owned by the Company or any U.S. Guarantor in the case of pledges securing the
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