Hubris Posted January 10, 2014 Share Posted January 10, 2014 Kodak recently emerged from bankruptcy and is in the search for a new CEO. The company has completely disposed of the consumer side of the business and has a limited cap of its liabilities at Eastman Business park. It trades at a forward FCF of around ~10 and management sees great potential for earnings expansion from its digital printing technologies. There should also be a significant expense reductions since the burden of the bankruptcy proceeding will no long be included in next years financial statements while they were included for nine months of the current year. There are two businesses one is basically in run-off which would be print cartridges which are high margin as well as films for the studios. The other is their printing solutions and technologies in businesses and software solutions and applications. So its a combination of a declining business with a higher growth business. The company also has issued warrants at two different strike prices which are 14.95 and 16.12 which expire during September 2018. Currently the warrants trade on thin volume however the warrants also trade at a discount to the strike price + exercise price implying a negative time value or an arbitrage opportunity. The company has debt of about 700M and cash of 900M. Therefore it has an excess cash position however there might be some capital allocation risk. The float is also very small since about 4 hedge funds own about 80% of the shares outstanding and warrants. So this could be quite volatile.Excepts_from__Lender_Presentation2013.pdfkodak_warrants.pdfKodak_Lender_Presentation_December_2013_120213_1915.pdf Link to comment Share on other sites More sharing options...
Packer16 Posted January 10, 2014 Share Posted January 10, 2014 From what I see here there are major issues. First, management is the same the put EK into bankruptcy with more goodies on the way out for Perez. The business they want to enter grow in is very competitive and they have tried to do this before the BK. I see a chapter 22 here. One of my relatives got a distribution from the BK and I advised to get out before the second BK. Packer Link to comment Share on other sites More sharing options...
Hubris Posted January 10, 2014 Author Share Posted January 10, 2014 Yes I am unhappy with Perez's compensation scheme and its far too generous. However, they have turned cash flow positive and do have excess cash so I would say maybe chapter 22 is a bit farfetched at least right now? They do have 200M over their current obligations and the environmental ones are capped at 50M. They have fired and downsized an spun off many of the less attractive parts of the business. There could be more changes to come so far management has been pretty tight lipped and investor relations have been impossible to get a hold of. Which could be a positive or a negative. Link to comment Share on other sites More sharing options...
Packer16 Posted January 10, 2014 Share Posted January 10, 2014 The business they are entering is the most competitive segment of printing with companies like Xerox having a better position (and this is not one of Xerox's best businesses). The supplies business is the good part of this business. This is an innovator's dilemma market with huge overcapacity in both printing and printer vendors. This market is analogous to the supercomputer market in that less expensive machines provide good enough capabilities. I would not take much stock in excess cash as they will blow through that if they focus on the large printer segment. Just my observations from living here in Rochester, NY. Packer Link to comment Share on other sites More sharing options...
60North Investments Posted October 23, 2015 Share Posted October 23, 2015 https://www.hvst.com/posts/53196 Artko Capital's just released letter talks about Kodak warrants. Does the board have any updated thoughts on the company? Today trading down almost 10% after Q3 release. Haven't yet done any work on the company (will do during the weekend) so looking forward to any comments. Link to comment Share on other sites More sharing options...
60North Investments Posted October 26, 2015 Share Posted October 26, 2015 Sliding ever more, today -20% on the board. Anyone have thoughts on this? Link to comment Share on other sites More sharing options...
sculpin Posted May 2, 2016 Share Posted May 2, 2016 Kodak $14.93 September 2018 Warrants Kodak continued to progress on our thesis of unlocking the value of its many segments. On March 15, 2016,the company announced that it was in the process of selling its PROSPER inkjetcommercial printing system to a strategic buyer.While we are sad to see the company part with such a great asset, Kodak’s management is right to sell it to someone with a bigger sales force and ability to provide customer financing for the $3 millionpiece of equipment. While Kodak is a$12.00 stock,we expect the company to receive over $5.00 per share (or over $200 million) for the sale of this business. Just as importantly, post-bankruptcy Kodak was saddled with $670 million in very high cost debt that is costing it $64 million a year or $1.60 per share in interest expenses. While Kodak has $550 million in cash on its balance sheet, currently only $300 million is available in the United States. However, with the upcoming sale of PROSPER,the company will finally pay down most of this unnecessary debt and generate an additional $1.00-$1.60 of annual Free Cash Flow to the shareholders. Since this is a volatile warrant position,we’ve taken advantage of the occasional price dips to add an additional 1% to our stake and to lower our cost basis throughout the quarter. https://www.hvst.com/posts/61068-artko-capital-lp-1q-2016-investor-letter Link to comment Share on other sites More sharing options...
sculpin Posted May 2, 2016 Share Posted May 2, 2016 Anyone have access? ArtkoCapital @ArtkoCapital 7h hours ago We published our long thesis on KODK on @SumZero this morning. We welcome you to check it out. Link to comment Share on other sites More sharing options...
Green King Posted May 2, 2016 Share Posted May 2, 2016 how much free cash flow did PROSPER generate ? What is the difference ? Link to comment Share on other sites More sharing options...
sculpin Posted May 2, 2016 Share Posted May 2, 2016 how much free cash flow did PROSPER generate ? What is the difference ? Link to comment Share on other sites More sharing options...
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