AlixPartners Honored by Turnaround Management Association For Work at Kodak

Kodak transformed into a technology company focused on imaging for business, approximately $3 billion in legacy liabilities shed, EBITDA improved by over $300 million

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| Source: AlixPartners

NEW YORK, Aug. 20, 2014 (GLOBE NEWSWIRE) -- AlixPartners, the global business advisory firm, has been honored by the Turnaround Management Association (TMA), receiving the international non-profit's "Turnaround of the Year-Mega Company" award for its work on behalf of Eastman Kodak Co. The AlixPartners team was led by James A. Mesterharm, managing director at AlixPartners and co-head of the firm's Turnaround & Restructuring Services group in North America, who served as chief restructuring officer at Kodak, and Becky Roof, managing director in AlixPartners' Turnaround & Restructuring Services group, who served as Kodak's chief financial officer.
 
AlixPartners worked in tandem with company management and advisers from Sullivan & Cromwell LLP and Lazard Frères & Co. Inc. on a consensual resolution that restructured Kodak's businesses, transforming the company into a business-to-business firm focused on commercial, packaging and functional printing, while also engineering an unprecedented, win-win spin-off of Kodak's consumer and document-imaging businesses to the company's U.K. pension fund, creating a new company called Kodak Alaris Holdings Ltd.
 
Said Mesterharm: "When AlixPartners was first engaged by Kodak, we hoped that the sale of the company's landmark patents would be enough to pay the company's debts in full. But when bids for the portfolio came in lower than anticipated, the management team, with guidance from AlixPartners and Lazard, had to revert to 'Plan B,' which was a total restructuring of the company.  The results, however, have been remarkable: a Kodak today that is focused, technology-driven and driving growth in revenue and profitability.  The restructuring provided the company with the opportunity to pursue game-changing technologies in new and developing markets.  On behalf of everyone at AlixPartners who worked on the Kodak engagement, I'd like to thank the TMA for recognizing our contributions to this success story." 
 
Said Roof: "Working hand in hand with management and other advisors, we were able to shed approximately $3 billion in legacy liabilities and improve operational EBITDA by over $300 million from 2012 to 2013.  By working closely with the U.K. pension fund and their advisors to spin-off Kodak Alaris, we were also able to help preserve thousands of jobs and help save an iconic company, something we're all very proud of and happy about." 
 
The award to AlixPartners will be presented at the TMA Annual Conference, held Sept. 29 to Oct. 1 at the Westin Harbour Castle in Toronto.
 
Case Study

During the 20th century, Kodak had been one of the most-recognized names in the business world.  At its peak the company employed 144,000, but by year-end 2011, after years of decline in its core film business, Kodak was already a much smaller company, with 17,000 employees, annual sales of $6 billion, $4.7 billion in assets and over $7 billion in liabilities. For years, Kodak had faced a secular decline in its film business, brought on initially by the rise in digital cameras and exacerbated by the proliferation of digital-image technology employed in mobile phones and tablets. The company's own expansion into digital technologies required significant investment to reach scale and profitability.
 
At the time of its Chapter 11 filing, on Jan. 19, 2012, Kodak's business encompassed a broad portfolio of consumer and commercial products and services, and considerable intellectual-property assets.  The bottom-line objective was to enable Kodak to make significant progress toward becoming a sustainable, profitable business, and to secure the support of creditors for its plan of reorganization and eventual emergence from bankruptcy.  Kodak was able to successfully obtain $950 million of initial debtor-in-possession financing upon its filing, and exited or divested money-losing and non-core businesses and assets in rapid succession.
 
AlixPartners, working closely with Kodak's senior management team, also undertook extensive operational-restructuring and profitability-enhancement work, resulting in an annual EBITDA improvement of over $300 million, including renegotiation of customer contracts, the rejection or renegotiation of a large number of unprofitable vendor contracts and leases, the wind-down of unprofitable and non-core businesses, significant consolidation of remaining business lines, and the streamlining of corporate and R &D functions. 
 
The team was also able to reach a consensual settlement agreement with the committee of U.S. retirees in Oct. 2012 to permanently eliminate $1.2 billion in OPEB liabilities, which had hampered the company with annual cash costs of $110 million.  Kodak's digital-imaging patent portfolio was sold in a highly-structured transaction to buyers for $527 million. The company also raised $406 million through an oversubscribed rights offering and obtained an $895 million exit facility to facilitate its emergence from Chapter 11.
 
In addition, the team was able to negotiate a win-win settlement with the Kodak U.K. Pension Plan (KPP) in April 2013, resulting in a spin-off of Kodak's consumer businesses to the KPP in exchange for the release of all of the company's worldwide obligations to the KPP (including the waiver of its $2.8 billion bankruptcy claim) and a $325 million cash payment from the KPP to Kodak.
 
In the end, the transaction created extraordinary value.  It repositioned Kodak, kept the KPP solvent and created two well-positioned businesses: a reorganized Kodak, owned by U.S. creditors, and Kodak Alaris, owned by the KPP.  It stands as one of the most innovative, unusual and successful deals ever consummated in the history of cross-border restructurings.
 
On Sept. 3, 2013, the reorganized Kodak emerged from bankruptcy.  The company subsequently relisted on the New York Stock Exchange on Nov. 1, 2013.
 
About AlixPartners

AlixPartners is a leading global business-advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business lifecycle.  We thrive on our ability to make a difference in high-impact situations and deliver sustainable, bottom-line results.  The firm's expertise covers a wide range of businesses and industries whether they are healthy, challenged or distressed.  Since 1981, we have taken a unique, small-team, action-oriented approach to helping corporate boards and management, law firms, investment banks and investors respond to critical business issues.  For more information, visit www.alixpartners.com.

Tim Yost 
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