Back in September we reported that bankrupt Kodak may license its 1,100 imaging patents rather than sell them at auction. Apparently, that's no longer the case.
Last month, Kodak struck a deal with creditors for $830 million in loans. The loan, however, is contingent on Kodak selling its patents for at least $500 million, The Wall Street Journal reports.
A consortium of bidders recently offered a little more than $500 million for the trove of patents. While that may seem like a huge sum, Kodak estimates the patents are actually worth up to $2.6 billion.
At its peak in the 1980s, Kodak employed 145,000 people worldwide. But ever since consumers began embracing digital cameras and camera phones, Kodak has been losing its footing in the photography market it once dominated.
As a result, the company filed for Chapter 11 bankruptcy back in January. In a Chapter 11 bankruptcy, companies often restructure and work toward becoming profitable again by selling assets, closing branches, renegotiating contracts, and laying off workers.
Kodak has laid off thousands of workers, negotiated to cut pension benefits, and even gotten rid of its camera film business. It will now move forward as a much smaller company with less diverse operations.
CEO Antonio Perez originally planned to focus the company on desktop printers for consumers and room-size printers for companies. However, the company has since decided to drop the consumer products and cater solely to companies.
The money from the patent sale will be a key source of cash during the company's restructuring. The auction for the patents began back in August. Initially, two competing groups were vying for the patents, but the bids were far too low.
The bidders have since united into one group, made up of Silicon Valley tech companies and companies that specialize in buying up patents. While a deal hasn't yet been reached, Kodak could be one step closer to exiting bankruptcy.
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