Kodak 2012 Annual Report Download - page 79

Table of Contents
Adjusted EBITDA (as defined in the DIP Credit Agreement) of not less than a specified level for certain periods, with the specified levels
ranging from $(130) million to $175 million depending on the applicable period. The Company and its subsidiaries must also maintain minimum
U.S. Liquidity (as defined in the DIP Credit Agreement) ranging from $100 million to $250 million depending on the applicable period. The
Company was required to maintain U.S. Liquidity of $125 million, $250 million, and $150 million for the periods from January 20, 2012 to
February 15, 2012; February 16, 2012 to March 31, 2012; and April 1, 2012 to September 30, 2012, respectively. From October 1, 2012 through
the termination of the DIP Credit Agreement, the Company must maintain minimum U.S. Liquidity of $100 million, subject to increase under
certain circumstances as described in the DIP Credit Agreement. Kodak was in compliance with all covenants under the DIP credit agreement as
of December 31, 2012.
The Company must prepay the DIP Credit Agreement with all net cash proceeds from sales of or casualty events relating to certain types of
collateral consisting of accounts, inventory, equipment or machinery (as defined in the DIP Credit Agreement). In addition, all net cash proceeds
from any sale in respect of Kodak’s digital imaging patent portfolio must be used to prepay the DIP Credit Agreement. With respect to all other
asset sales or casualty events, or intellectual property licensing or settlement agreements, 75% of the net cash proceeds must be used to prepay
the DIP Credit Agreement and 25% may be retained by Kodak (retained proceeds were $12 million as of December 31, 2012). However, once
Kodak’s share of these retained proceeds totals $150 million, all remaining and future net cash proceeds must be used to prepay the DIP Credit
Agreement.
The Borrowers drew $700 million in term loans under the DIP Credit Agreement during the first quarter of 2012 and have issued approximately
$126 million of letters of credit under the revolving credit facilities as of December 31, 2012. Under the DIP Credit Agreement borrowing base
calculation the Borrowers had approximately $45 million available under the revolving credit facilities as of December 31, 2012. Availability
under the DIP Credit Agreement is subject to borrowing base availability, reserves and other limitations.
On February 1, 2013, Kodak entered into a series of agreements under which it received approximately $530 million of proceeds, net of
withholding taxes, a portion of which was paid by intellectual property licensees and a portion of which was paid by the acquirers of Kodak’s
digital imaging patent portfolio. Approximately $419 million of the proceeds was used to prepay the term loan under the DIP Credit Agreement.
On February 6, 2013, the Company received consents for an amendment from the lenders under its DIP Credit Agreement to extend the covenant
requirement to file a plan of reorganization and disclosure statement from February 15, 2013 to April 30, 2013. The Company also sought
consent for an additional amendment to permit the incurrence of the Junior DIP Facility and to (i) extend the maturity date of the DIP Credit
Agreement facility from July 20, 2013 to September 30, 2013, to match the maturity of the Junior DIP Facility, (ii) eliminate the Canadian
revolving facility, which is not being used by Kodak, and reduce the aggregate amount of the U.S. revolving credit commitments from $225
million to $200 million, (iii) remove machinery and equipment from the borrowing base of the revolving facility and (iv) revise the existing
financial covenants and modify other covenants to match the terms proposed for the Junior DIP Facility. This additional amendment did not
become effective because a condition to effectiveness was closing the Junior DIP Facility on or before February 28, 2013. The Company has
engaged the DIP Credit Agreement agent to solicit the ABL DIP Credit Agreement lenders to re-consent for this amendment with a new
expiration date of April 5, 2013.
JUNIOR DIP FACILITY
On February 28, 2013, the Company and members of the Steering Committee of the Second Lien Noteholders (the “Commitment Parties”)
agreed to structure and arrange a junior secured priming super-priority debtor-in-possession term loan facility (the “Junior DIP Facility”) in an
aggregate amount of up to $848 million consisting of (i) first lien term loans in the aggregate principal amount of $455 million (the “
New Money
Loans”) and (ii) junior lien term loans in the aggregate principal amount of up to $375 million consisting of a dollar-for-dollar “roll-up” (such
loans, the “Rolled-Up Loans”) for a portion of the amounts outstanding under the Second Lien Notes. The Bankruptcy Filing created an event of
default under the Second Lien Notes. The Junior DIP Facility will allow for payment of certain fees in cash or additional New Money Loans.
Closing of the Junior DIP Facility is subject to certain conditions, including approval by the Bankruptcy Court of the Junior DIP Facility,
repayment in full of the term loans under the DIP Credit Agreement, and consent of the ABL Lenders under the existing DIP Credit Agreement
and related order of the Bankruptcy Court permitting the incurrence of the Junior DIP Facility, in a form reasonably satisfactory to the Required
Lead Lenders (as defined in the agreement with the Commitment Parties). On March 1, 2013, the Debtors filed a motion with the Bankruptcy
Court seeking approval of the Junior DIP Facility. The Bankruptcy Court approved the Debtors’ motion on March 8, 2013. The agreement with
the Commitment Parties expires on April 5, 2013.
The Junior DIP Facility would mature upon the earliest to occur of (i) September 30, 2013, (ii) the effective date (the “Effective Date”) of the
chapter 11 plan for the reorganization of the Company (the “Chapter 11 Plan”), to the extent amounts outstanding under the Junior DIP Facility
are not converted into exit term loans as described below, and (iii) the acceleration of the loans in accordance with the terms of the agreement.
The Company would have the ability to convert the Junior DIP Facility into an up to $654 million exit facility with an additional five year term
provided that Kodak meets certain conditions and milestones, including Bankruptcy Court approval of a plan of reorganization by September 15,
2013, with an effective date no later than September 30, 2013; repayment of $200 million of principal amount of New Money Loans; and
receiving at least $600 million in cash proceeds through the disposition of certain specified assets, including any combination of the Document
Imaging and Personalized Imaging businesses and trademarks and related rights provided
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