October 1, 2011- Eastman Kodak saw its shares lose over 50% of their value on Friday as investors concerns over the company’s prospects increased. The company recently hired a law firm to help with advice on restructuring but they insisted they no plans of filing for any type of bankruptcy protection.
The recent move by Kodak is a way for them to ensure the company has the wherewithal to handle its financial and strategic restructuring. After the company announced last week that it had to draw down $160 million from its credit line, shares fell sharply in the company.
The use of the credit line increased concerns about the cash flow situation in the 131-year old company. It also triggered rating agencies to downgrade its credit rating. On Friday, Kodak shares dropped 54% to just $0.78 per share after Wall Street announced the company had decided to hire advisors for its restructuring.
A press release released by the company after stocks closed on Friday said, “Kodak is committed to fulfilling all obligations and has no intention of filing for protection under the U.S. bankruptcy laws.”
Kodak plans to have the law firm advise them on improving its finances with the possibilities including increasing equity or debt and asking some creditors to accept a stake in the company in exchange for forgiving some debt.