Kodak Sells Imaging Sensor Business

[coz]

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BFW 11/07 21:04 Kodak Sells Image Sensor Business to Platinum Equity
BN 11/07 21:03 *KODAK DEAL TERMS UNDISCLOSED :EK US
BN 11/07 21:03 *KODAK SELLS IMAGE SENSOR BUSINESS TO PLATINUM EQUITY :EK US
BN 11/07 21:01 *KODAK SELLS IMAGE SENSOR TO PLATINUM EQUITY


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Kodak Sells Image Sensor Business to Platinum Equity
2011-11-07 21:01:00.493 GMT

Kodak Sells Image Sensor Business to Platinum Equity

Business Wire

ROCHESTER, N.Y. -- November 07, 2011

Eastman Kodak Company (NYSE:EK) announced today that it has completed the sale of its Image Sensor Solutions (ISS) business to Platinum Equity in a move that will sharpen Kodak’s operational focus and strengthen its financial position.

While the financial details were not disclosed, Kodak will have continuing access to the image sensor technology involved in this transaction for use in its own products. Kodak has previously communicated that it would sell assets that are not central to its transformation to a profitable, sustainable digital company. This sale is aligned with that strategy to generate cash to complete the transformation.

Included in the sale is a 263,000 square foot facility in Eastman Business Park in Rochester, N.Y., that houses manufacturing and research facilities.

The ISS business develops, manufactures, and markets the world’s highest performance solid state image sensor devices. Over the past 30 years, Kodak’s image sensors have delivered unrivaled image quality and innovative features for use in a broad range of demanding imaging applications. From precision manufacturing inspection to digital radiography, from earth imaging satellites to traffic monitoring, from the world’s highest performing studio photography cameras to DNA sequencing systems, customers around the world rely on high-performance products from ISS in the most mission-critical applications.

Platinum Equity is a global M&A&O^® firm specializing in the merger, acquisition and operation of companies that provide services and solutions to customers in a broad range of business markets.

“Image Sensor Solutions is a business that is well-positioned in the high-performance imaging markets in which it participates,” said Pradeep Jotwani, President, Consumer Digital Imaging Group, and Senior Vice President, Eastman Kodak Company. “This sale maximizes shareholder value by obtaining a full and fair valuation for this business, and allows Kodak to increase its financial flexibility.”

Jotwani noted that Platinum Equity brings significant financial and operational resources to the ISS business and a comprehensive plan to ensure its continued success.

“Platinum Equity is an ideal acquirer of Kodak’s ISS business because they are committed to the success of the business for the benefit of customers and employees,” Jotwani said. “I’m very pleased that we have such a favorable outcome for all of our constituents.”

Platinum Equity focuses on acquiring businesses that can benefit from the firm’s extensive in-house capability and expertise in transition, integration and operations.

“This is a great opportunity to acquire a business with an impressive record for delivering innovative solutions to customers around the world,” said Brian Wall, the partner at Platinum Equity who led the team pursuing the acquisition. “The ISS business has a strong management team with the right vision for leading the company into the future. We share their commitment to product development and customer service and are committed to helping the business realize its full potential.”

Wall said Platinum Equity’s experience managing complex transitions from corporate parent companies will benefit employees, customers and other partners.

“Our operations group will work hand-in-hand with the management team to ensure a seamless transition while allowing the organization to stay focused on delivering world class imaging products and solutions,” said Wall. “We are proud to have forged a unique divestiture solution in partnership with Kodak that serves the best interests of everyone involved.”

[ho_co]

one public account of the sale: StreetInsider.com - Eastman Kodak (EK) Completes Sale of Image Sensor Solutions Business to Platinum Equity

[SJP]

Kodak will have continuing access to the image sensor technology involved in this transaction for use in its own products

Fine, but I nowhere read that they will continue to supply all the existing products to external parties. Not that I am particularly worried (except for the extreme woolliness of the press statement), take this one: "Jotwani noted that Platinum Equity brings significant financial and operational resources to the ISS business and a comprehensive plan to ensure its continued success."

Comprehensive plan = hatchet job? It could be anything.

[250swb]

Originally Posted by SJP

Fine, but I nowhere read that they will continue to supply all the existing products to external parties.

We get good news but the glass is still half empty.

Steve

[JimGoshorn]

Just read this:

Kodak sells image sensor business | www.WHEC.com

Kodak will retain access to it's technologies under the agreement with Platinum Equity.

Wonder how this will affect advancement of their technologies and production going forward.

Jim

[SJP]

No it's half full, but a bit murky.

I am highly optimistic by nature, but these newspeak press releases really stick in my throat. I can recall a certain Dutch company that tossed out all their research and this was advertised as a "benifit", that was about 10 years ago & now they only produce paint & chemicals. All the good parts have been taken over.

[IkarusJohn]

Originally Posted by JimGoshorn

Just read this:

Kodak sells image sensor business | www.WHEC.com

Kodak will retain access to it's technologies under the agreement with Platinum Equity.

Wonder how this will affect advancement of their technologies and production going forward.

Jim

Looks like a managed sell-down of the company.

It's always a balance between selling the profitable parts of the company for the best return, and deciding what is left. Could be the dead core, which is then liquidated. Such an approach has the best chance of repaying the most of the borrowing.

Receivership & liquidation typically has the worst results for creditors, and if they wanted to continue to trade (as they say), wouldn't they file for Chapter 11 protection against creditors? or maybe things aren't that bad ...

[zlatkob]

I don't quite understand this move. The company tanks because the digital revolution replaces their core business. So, to "strengthen" the company, they sell the digital sensor business, i.e., the technology at the heart of the digital revolution? If digital sensors are not "central to its transformation", what is Kodak transforming to?

[mmradman]

Beware, 263,000 sq.ft. of real estate at the right place and the right time can be worth more to the investor than product that can be developed and manufactured there.

[IkarusJohn]

Originally Posted by SJP

Fine, but I nowhere read that they will continue to supply all the existing products to external parties. Not that I am particularly worried (except for the extreme woolliness of the press statement), take this one: "Jotwani noted that Platinum Equity brings significant financial and operational resources to the ISS business and a comprehensive plan to ensure its continued success."

Comprehensive plan = hatchet job? It could be anything.

I assume that the 263,000 square foot facility isn't ripe for redevelopment ...

These press releases are always full of flab, but they are required by the NYSE to contain some element of truth, between the double speak.

If Platinum genuinely do wish to operate the company, rather than simply asset strip, Leica will be part of a reasonably significant stable of good customers they will (should) wish to keep happy.

Any link between Platinum Equity (a dodgy sounding name for a bunch of asset strippers) and Blackstone or ACM?

Cheers
John

[StephenPatterson]

It means that the name on the supplier checks from Leica will say "Image Sensor Solutions" instead of "Kodak Image Sensor Solutions". For users I predict nothing will change, for new M9 production or repairs of M8s and M9s.

Now, how long ISS will continue to produce M8 and M9 sensors and how many sensors Leica will stock when these parts are eventually discontinued by ISS is another matter.

[pico]

So, should I put the M9 into safe storage and use the M7 and M4s until all this winds down to a conclusion?

[StephenPatterson]

Originally Posted by zlatkob

...If digital sensors are not "central to its transformation", what is Kodak transforming to?

A crappy printer manufacturer, that get's killed by Canon, Epson, Lexmark and all the others in a "race to the bottom".

[mjh]

Originally Posted by SJP

Fine, but I nowhere read that they will continue to supply all the existing products to external parties.

Who else but third parties would they sell the sensors to? I am not aware of any Kodak camera with a Kodak CCD.

[coz]

Will the M10 & S3 be CCD?

[dave_d]

Originally Posted by mmradman

Beware, 263,000 sq.ft. of real estate at the right place and the right time can be worth more to the investor than product that can be developed and manufactured there.

This isn't true in Rochester, NY.

[AlanG]

Originally Posted by mjh

Who else but third parties would they sell the sensors to? I am not aware of any Kodak camera with a Kodak CCD.

Somebody is making sensors and cameras for the US military drones and reconnaissance platforms. It may be Kodak. I don't know if Kodak currently makes hi speed and other cameras for scientific applications. But they could make them again if they don't currently.

I've been reading all of these Kodak announcements and it seems to me that they have a work out plan that is a bit of a high wire act. They are desperate to raise cash. Their credit lines are nearly exhausted so they are selling assets. Besides the sale of the sensor division, they are trying to sell around 10% of their patents. The idea is to keep the company going until their other divisions including commercial and consumer inkjet businesses become profitable. They have packaging and some other divisions too. Kodak's CEO comes from HP's printer division and their digital imaging division.

Another problem, best I can understand it as I'm not a lawyer or familiar with these laws, is that if they sell a lot of assets and up quickly going bankrupt after spending that money on a failed plan, the stockholders who are left with nothing may have recourse to go after those who bought the assets. An alternative is for Kodak to go bankrupt now and liquidate its assets. This would leave some money for the stockholders after all creditors are paid.

[stevelap]

According to Thom Hogan's site http://www.bythom.com/ Kodak also announced a new sensor yesterday.


"Ironically, Kodak announced some new CCDs today (e.g., 16mp full frame with some unique properties) but that news got buried by the sale announcement."


The Olympus saga seems to be going from bad to worse too.

[andybarton]

I would imagine that there will be some criminal charges coming to some Olympus executives pretty soon.

[wattsy]

Originally Posted by AlanG

Another problem, best I can understand it as I'm not a lawyer or familiar with these laws, is that if they sell a lot of assets and up quickly going bankrupt after spending that money on a failed plan, the stockholders who are left with nothing may have recourse to go after those who bought the assets.

I was wondering that too. There are presumably laws in the US to prevent blatant asset stripping that leaves a shell company to fail along with its liabilities? What about Kodak's pension liabilities? I'm not familiar with US practice in this regard but is the pension fund (presumably substantial) a protected entity or do past and present employees with pension entitlement get shafted along with the shareholders and creditors when a company the size of Kodak goes to the wall?