Kodak to issue 30 million shares to convertible bond holders after last week’s 940% rally (KODK)

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Thomson Reuters

  • Kodak has said it will issue 30 million shares to holders of its convertible bonds, according to an 8-K filed with the SEC on Monday.
  • The move is a signal that its creditors are ready to cash in on last week’s 940% market rally, which was spurred by the company receiving $ 765 million from the U.S. government to produce generic ingredients.
  • Kodak’s outstanding shares will rise 60% to $ 75.5 million after debt-to-equity is converted, which is expected to happen on Monday.
  • Kodak shares fell 22% on Monday after the Rochester, New York-based company leaked the news.
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Kodak bondholders are poised to cash in on last week’s monster stock rally, which saw shares climb to 2,190% in three days after the company secured a $ 765 million loan from the US government.

In an 8-K filed with the Securities and Exchange Commission on Monday, Kodak said it would issue 29.9 million new shares after receiving notice from its convertible debt holders that they were ready to exercise their right. convert their debt into shares.

Convertible debt is a hybrid bond that allows the debtor to convert their notes into shares. Convertible notes are generally reserved for companies with an undesirable debt rating and are generally held by bond investors who see both upside potential and high risk in the company.

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Kodak said on July 29 that it had received conversion notices from holders of its 5.0% guaranteed convertible notes due 2021. The total value of the convertible notes is $ 95 million, which will then be converted into 29 , 9 million shares which can then be sold.

At today’s opening price of $ 21.00, the $ 95 million stake in convertible notes is worth $ 628 million.

According to the 8-K, the notes were issued in 2019 to a number of funds managed by Southeastern Asset Management.

Kodak’s outstanding shares will rise 60% to $ 75.5 million after debt-to-equity is converted, which is expected to happen on Monday.

Kodak shares fell 24% to $ 16.29 in Monday’s trades.

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