Recently, Eastman Kodak Company (EK) announced the pricing of its private placement of $500 million, the total principal amount of 9.75% senior secured notes due 2018.

Kodak intends to use the net proceeds from the offering to repurchase the entire $300 million, the total principal amount of its 10.50% Senior Notes due 2017 and to repurchase $200 million, the total principal amount of its 7.25% Senior Notes due 2013 through a tender offer.

Kodak also has a strong balance sheet with net cash of $833 million at the end of December 2009. Moreover, the company has announced plans to implement a targeted cost reduction program (the 2009 Program) to resize itself in view of the current economic environment. The program, along with new product launches and numerous expansion programs will enable the company to grow despite the difficult environment.

However, Kodak operates in a highly competitive market, and encounters aggressive price competition for all of its products and services from numerous companies globally.  Based on its international distribution, Kodak is subject to foreign currency risks, changes in interest rates and commodities costs, which are volatile in nature.

As part of the business strategy, Kodak frequently engages in discussions with third parties regarding possible investments, acquisitions, strategic alliances, joint ventures, divestitures and outsourcing. The company may face integration and other risks related to these transactions, which in turn will have a material adverse impact on its profitability.

Zacks Investment Research

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