Kodak is planning to sell off its Flexographic Packaging Division (FPD) in an effort to repay its outstanding debt, clearly signalling the company’s ongoing financial problems.
Kodak’s flexo offering is based around its Flexcel NX system, which includes plates, imaging equipment and related consumables. This has been one of the few growth areas for Kodak, realising a 9 percent increase in revenue to $150 million and 18 percent Operational EBITDA growth to $33 million over the last year.
Jeff Clarke, Kodak’s CEO, says that now is the right time to monetize this division, saying: “This is a great opportunity to unlock value for shareholders given the strong interest we have received in the Flexographic Packaging Division. FPD has performed exceptionally well over the past five years and has become a significant player in the industry.”
Kodak has also entered into a non-binding letter of intent for a $400 million loan over an 18 month period with one of its current lenders in an effort to refinance its existing debt. The proceeds from the FPD sale will be used to repay this loan.
Meanwhile, Kodak has also released its figures for the second quarter of this year, showing revenue of $372 million, down on the $381 million of the same period in 2017. This generated $9m in Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA), down from the $12m last year.
Most divisions saw a slight fall in revenue, with Print Systems division down from $236m to $227m and Enterprise Inkjet Systems down from $35m last year to $33m this year though FPD went up from $37m to $38m this quarter.
Kodak has announced a cost-cutting plan to save some $40m per year. David Bullwinkle, Kodak’s chief financial officer, explained: “To strengthen our liquidity, we have initiated actions to reduce operating costs, including driving greater efficiencies in investment spending and operations of our mature businesses.”
Still, at least the Kodak people have a sense of humour, having just announced a new initiative – the Kodak Global Flexo Innovation Awards – to celebrate the tenth anniversary of the Flexcel NX system. The winners will be announced early next year, hopefully before Kodak manages to sell off this division!