Eastman Kodak, the 133-year-old photography company, is warning investors that it might not survive much longer.
In its earnings report earlier this week, the company warned that it doesn’t have “committed financing or available liquidity” to pay its roughly $500 million (AUD$763 million) in upcoming debt obligations.
“These conditions raise substantial doubt about the company’s ability to continue as a going concern,” Kodak said in a filing.
Kodak aims to conjure up cash by ceasing payments for its retirement pension plan. It also said that it doesn’t expect tariffs to have “material impacts” on its business because it manufactures many of its products, including cameras, inks and film in the United States.
“In the second quarter, Kodak continued to make progress against our long-term plan despite the challenges of an uncertain business environment,” said Kodak CEO Jim Continenza in the earnings release.
In a statement to CNN, a Kodak spokesperson said that it’s “confident it will be able to pay off a significant portion of its term loan well before it becomes due, and amend, extend or refinance our remaining debt and/or preferred stock obligations.”
Shares of Eastman Kodak (KODK) slumped more than 25 per cent in midday trading on Tuesday.
The Eastman Kodak Company was incorporated in 1892, but the company traces its roots back to 1879, when George Eastman obtained his first patent for a plate-coating machine. In 1888, Eastman sold the first Kodak camera for $25.
At the time, photography was not a mass business because of the technical skills and equipment needed to do it, but the Kodak camera was designed to make photography more widely accessible. Eastman coined the slogan: “You push the button, we do the rest.”
The name was largely meaningless, with the word “Kodak,” according to the company, being invented by Eastman out of thin air: “The letter ‘K’ had been a favorite with me — it seems a strong, incisive sort of letter.”
Kodak had a century of success producing cameras and film. At one point in the 1970s, it was responsible for 90 per cent of film and 85 per cent of camera sales in the United States, according to The Economist. Paul Simon’s hit song “Kodachrome” topped the charts in 1973.
But that powerful market position would not last because of the technology the company invented: Kodak introduced the first digital camera in 1975.
Kodak failed to capitalise on the rise of the digital technology. In 2012, it filed for bankruptcy. At the time of its Chapter 11 filing, it had 100,000 creditors and debts totaling $6.75 billion.
In 2020, Kodak had a brief moment of reprieve when the US government tapped it to transform into a pharmaceutical ingredients producer. Kodak’s stock price rose so fast it tripped 20 circuit breakers throughout the trading session.
Despite its recent losses, Kodak recently said it aims to expand that part of its business. The company continues to manufacture films and chemicals for businesses, including the movie industry, and it licenses its brand for a variety of consumer products.
