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Category: WTO Sub-category: Intellectual Property
Document type: news
Bidders are lining up in earnest now that Eastman Kodak's patent sale is set to resume. The auction for more than 1,000 of Kodak's digital imaging patents is ramping up soon.
Investment banks Lazard Ltd. and Jefferies & Company Inc, an adviser to the unsecured creditors committee, are working together on the patent sale, which they hope will bring in as much as $2 billion.
The banking tandem had previously worked in similar roles advising bankrupt telecom-equipment maker Nortel Networks Corp. on the sale of about 6,000 patents to an Apple Inc-led consortium for $4.5 billion.
The company, which holds 10,000 patents, will focus a significant part of its restructuring on finding a buyer for the 1,155 US patents within its Digital Capture and Kodak imaging Systems & Services portfolios. The portfolios also include more than 500 foreign patents.
A number of global competitors are likely to emerge as interested parties - some of which are embroiled in patent litigation with Kodak - with Intel Corp, Samsung , Apple and Fujifilm among a list of possible buyers.
The auction will follow the terms specified under Kodak's $950 million debtor-in-possession, or DIP, financing loan. That loan says that a motion has to be filed with the courts regarding the sale of the patents by June 30, 2012.
Kodak obtained its 18-month DIP loan from Citigroup Inc. in February to continue operations while it went through the bankruptcy process.
According to two sources, Kodak has yet to send out a "teaser" document containing basic financial information to prospective suitors. The auction process is expected to follow a bankruptcy court-administered sale known as a 363 deal, which involves a "stalking horse" bid in which a buyer agrees to make a bid for most of the assets, setting the floor price for the process.
In the Nortel auction, it had received court approvals for a "stalking horse" bid made by a unit of Google Inc. for its portfolio of technology patents valued at $900 million. After three months and several bidding rounds, Apple and its consortium, which included Microsoft Corp. and Research in Motion Ltd, made a whopping $4.5 billion bid.
Earlier this month, Kodak agreed to sell its online photo services business to Shutterfly Inc. for $23.8 million.
However, Kodak is expected to retain the patents associated with its core printing business.
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Debtor in possession in United States bankruptcy law is a person or corporation who has filed a bankruptcy petition, but remains in possession of property upon which a creditor has a lien or similar security interest. A corporation which continues to operate its business under Chapter 11 bankruptcy proceedings is a debtor in possession.
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