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Kodak Shares Plunge On Unexplained Friday Borrowing
http://online.wsj.com/article/BT-CO-201 ... 09088.html
NEW YORK (Dow Jones)--Eastman Kodak Co.'s (EK) stock flirted with its all-time low Monday morning as shareholders digested the struggling imaging company's announcement late Friday that it had borrowed against its credit line.
Kodak said it drew $160 million from its credit line but didn't describe a specific use of the proceeds. Monday, Kodak shares recently fell 25%, to $1.78, near its all-time low of $1.75.
"There's no explanation from the company other than, 'Oh, it's the normal course of business'? The communication from this company is abysmal," said Ken Luskin, chief executive of Intrinsic Value Asset Management Inc., which owns 3.8 million Kodak shares.
A Kodak spokesman was unavailable for comment Monday. On Friday, he said in an e-mailed statement that the credit facility "has been a part of Kodak's cash-management tool kit for some time" and is used to manage seasonal differences in the company's cash flows. He declined to elaborate on the specific use of proceeds in this case.
Luskin said shareholders are awaiting an update on the progress of Kodak's potential sale of a valuable trove of digital imaging patents. An intellectual property deal could help Kodak's multiyear effort to refocus its business on commercial and consumer business as its legacy film operations continue to decline.
The patents the company is considering selling may be worth $2.4 billion, according to Rafferty Capital analyst Mark Kaufman.
Kodak has been burning through cash as it tries to refocus its efforts on commercial and consumer printing. Chief Executive Antonio Perez said in July that Kodak expects to finish the year with $1.6 billion to $1.7 billion in cash, up from the roughly $1 billion it had at the end of the second quarter.