Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Format:
.xlsx
Data source: Field research
Abstract
Spreadsheet supplement for case 'Eastman Kodak Company: Restructuring a Melting Ice Cube'. In May 2013, senior managers of GSO Capital Partners, an USD80 billion credit-oriented investment firm owned by The Blackstone Group, are considering what to do next with their investment in the senior secured debt of Eastman Kodak Company. Once a great company and an icon of American business, Kodak had fallen on desperately hard economic times as its traditional business of manufacturing cameras and photographic film had all but disappeared with the rise of digital photography, causing its annual revenues to plummet from USD13 billion to USD6 billion, and its stock price to fall by 95%, between 2003 and 2011. Having taken various positions in Kodak's debt during the previous four years, GSO is now faced with a major decision. Under the company's recently proposed plan of reorganization, secured creditors were to be given 85% of the company's common stock, but unsecured creditors objected to the plan. Now, six months later, GSO has brought an amended plan to the table, under which it would commit to backstop a USD406 million equity rights offering that would be made directly to all the unsecured creditors. This offer might bring the objecting creditors on board, but could also require an additional large capital commitment by GSO, which was already heavily invested a highly troubled business that many viewed as a 'melting ice cube.'
Location:
Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 3 October 2023
Revision date: 17-Nov-2023
Length: 34 pages
Data source: Field research
About
Abstract
Spreadsheet supplement for case 'Eastman Kodak Company: Restructuring a Melting Ice Cube'. In May 2013, senior managers of GSO Capital Partners, an USD80 billion credit-oriented investment firm owned by The Blackstone Group, are considering what to do next with their investment in the senior secured debt of Eastman Kodak Company. Once a great company and an icon of American business, Kodak had fallen on desperately hard economic times as its traditional business of manufacturing cameras and photographic film had all but disappeared with the rise of digital photography, causing its annual revenues to plummet from USD13 billion to USD6 billion, and its stock price to fall by 95%, between 2003 and 2011. Having taken various positions in Kodak's debt during the previous four years, GSO is now faced with a major decision. Under the company's recently proposed plan of reorganization, secured creditors were to be given 85% of the company's common stock, but unsecured creditors objected to the plan. Now, six months later, GSO has brought an amended plan to the table, under which it would commit to backstop a USD406 million equity rights offering that would be made directly to all the unsecured creditors. This offer might bring the objecting creditors on board, but could also require an additional large capital commitment by GSO, which was already heavily invested a highly troubled business that many viewed as a 'melting ice cube.'
Settings
Location:
Related
Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 3 October 2023
Revision date: 17-Nov-2023
Length: 34 pages
Data source: Field research