Eastman Kodak sold off its digital imaging patents to a consortium of bidders including Google and Apple. The $525 million will be used to pay creditors. The firm filed for bankruptcy last January.
Although Kodak was one of the pioneers in digital photography, it failed to keep up with competitors in the area. Since filing for bankruptcy, it has been selling off patents and has ceased producing digital cameras.
The bids for almost 1,100 patents came in quite low. The target for the auctions was $2.6 billion. The consortium that bought the patents consisted of many well-known firms including: Apple, Microsoft, Google, Samsung, Adobe, Facebook, Amazon, BlackBerry-maker Research In Motion, Fujifilm, and Huawei Technologies. The agreements must be approved by the U.S. Bankruptcy Court in New York.
In spite of the low bids Kodak's CEO Antonio Perez said:"This monetisation of patents is another major milestone toward successful emergence. This proposed transaction enables Kodak to repay a substantial amount of our initial DIP loan [loans used to turn around a business], satisfy a key condition for our new financing facility, and position our commercial imaging business for further growth and success."
Kodak is under Chapter 11 protection. This allows the company protection from its creditors and time to reorganize debts and to sell parts of its business. Kodak intends to exit bankruptcy in the first half of 2013 and concentrate upon making printing equipment and commercial imaging. The proposed transaction comes after the company successfully negotiated an agreement as well for interim and exit financing.
For years, Kodak was the industry leader in making film and cameras. However, the company failed to keep up with the digital revolution, in spite of its own pioneering work in the area. When it emerges from bankruptcy, it will have a much narrower focus having abandoned the manufacture of cameras altogether.