Kodak Struggles As They Tap Into Cash Reserves

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Kodak is facing a tough future as it struggles to generate cash in a market when borrrowing for a struggling business is difficult.On Friday Kodak drew down  $160 million from its credit line as the Company tries to turn their operations around from being a digital camera Company to a company focused on printers and consumables.

The company has $957 million in cash on hand as of June 30 and has told investors it would end the year with $1.6 billion to $1.7 billion. The Wall Street Jornal said that with just one week left in the third quarter, investors appear less convinced that target can be hit.

“They have to sell some stuff to get there, and quick,” said Chris Whitmore, an analyst with Deutsche Bank. Mr. Whitmore currently thinks Kodak will end the year with $1.4 billion in cash. “We’re questioning whether our estimate is even too aggressive,” he said.

Kodak shares lost nearly a quarter of their value Monday, falling to $1.78 midday, near their lowest price in a year. Bond investors also ran for the exits, with one bond that matures in 2017 trading at just 49 cents on the dollar, down from 65 cents on the dollar. Trading in both the shares and bonds was heavy.

Kodak spokesman Gerard Meuchner said the company chose to tap its credit line because 70% of its revenue in the first half was generated outside the US, and the company chose not to bring it back to the country.

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