The bankrupt photography company said in a statement that Intellectual Ventures will purchase the digital imaging patent portfolio and that it entered into agreements with 12 intellectual property licensees organized by Intellectual Ventures and RPX Corp. that will each receive rights to Kodak's patents. Intellectual Ventures and each of the 12 licensees are paying a portion of the $525 million.
"This monetization of patents is another major milestone toward successful emergence," Kodak chairman and CEO Antonio M. Perez said in the statement. "Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company. This proposed transaction enables Kodak to repay a substantial amount of our initial DIP loan, satisfy a key condition for our new financing facility, and position our Commercial Imaging business for further growth and success."
The deal also includes an agreement to settle patent-related litigation between the participants and Kodak, allowing the debtor to avoid significant litigation costs and focus on enhancing operations of its future businesses, the statement said.
Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan will hold a hearing to approve the deal on Jan. 11, according to a motion filed Wednesday.
Kodak said its monetization of the intellectual property assets further builds on its momentum toward emerging from Chapter 11 in the first half of 2013.
Selling the patent portfolio for at least $500 million was one of the conditions under Kodak's $830 million debtor-in-possession loan.
The Rochester, N.Y., photography company has obtained an $830 million loan commitment from 10 institutional lenders led by Wilmington Trust NA that hold $342 million of Kodak's second-lien notes.
Gropper sanctioned the commitment letter for the DIP on Dec. 14.
Kodak, meanwhile, is looking to give all of its second-lien noteholders the opportunity to participate in the new financing, and will appear in court on Wednesday to seek approval of solicitation procedures for the DIP participation.
The new DIP includes $455 million in new money and rolls up $375 million in second-lien debt. Kodak could roll up $630 million of the DIP into an exit loan upon its emergence from bankruptcy, provided that occurs by Sept. 30.
Archview Investment Group LP, Bennett Management Corp., D.E. Shaw Laminar Portfolios LLC and Litespeed Master Fund Ltd. are among the 10 lenders in the new DIP loan. These entities had previously been turned down when they offered financing that was deemed less attractive than the UBS-led DIP.
Upon funding of the loan, Kodak will repay in full the $700 million term loan in its $950 million DIP facility from Citigroup Global Markets Inc.
Founded in 1880 by George Eastman, Kodak was once the world's leading producer of film and cameras.
Since it filed for bankruptcy on Jan. 19, the company has sought to reposition its business to focus on commercial, packaging and functional printing solutions and enterprise services.
Andrew G. Dietderich, John J. Jerome, Michael H. Torkin and Mark U. Schneiderman at Sullivan & Cromwell LLP and Pauline K. Morgan and Joseph M. Barry at Young Conaway Stargatt & Taylor LLP are debtor counsel.
James A. Mesterharm of AlixPartners LLP is Kodak's chief restructuring officer. David Descoteaux of Lazard is the company's investment banker.
Counsel to an ad hoc group of second-lien noteholders is Michael S. Stamer, Abid Qureshi, Brian T. Carney and James R. Savin of Akin Gump Strauss Hauer & Feld LLP.
Davis Polk & Wardwell LLP represents Citigroup.
Private equity firm Apax Partners elected Andrew Sillitoe and Mitch Truwit as co-CEOs. On Jan. 1, they will succeed Martin Halusa. For other updates launch today's Movers & shakers slideshow.
To hear more of Jim Cramer′s M&A predictions for 2014 go to www.thedeal.com and sign up to listen to him live on Dec. 5 at the NYSE. More video