Kodak shares tumble 28% amid fears about its future

 

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Shares in Eastman Kodak have fallen 28% on speculation the photography firm was preparing to file for bankruptcy protection in the US.

Shares dropped 18 cents to a record low of 47 cents on Wednesday.

The sell-off was triggered by a report in the Wall Street Journal alleging Kodak was preparing a Chapter 11 filing after struggling to sell key assets.

A Kodak spokesman said that the company did not comment on market rumour or speculation.

In November, Kodak said that it needed to raise cash in order to continue operating in 2012.

The company said it was going to explore selling or licensing around 1,100 of its digital imaging patents - roughly 10% of its total library.

However, according to the Wall Street Journal, Kodak has now started to look at a number of options to ensure its survival, including filing for a Chapter 11 bankruptcy protection.

It is also in talks with banks about raising $1bn (£640m) in financing to keep it afloat during Chapter 11 proceedings, the newspaper said, citing unnamed people familiar with the matter.

Kodak may file for Chapter 11 either this month or in early February, the WSJ claimed, adding that the company would continue to pay its bills and operate normally if went in bankruptcy protection.

It would also continue trying to find a buyer for the patents.

Changing times
Kodak Easyshare camera Kodak's brand-name is one of the most recognisable in world photography

Kodak was one of the most famous global photography brands, but the company has been overtaken by rivals who reacted more quickly to the arrival of digital techniques.

The 131-year-old firm has been squeezed by weaker sales of consumer products and the heavy cost base of its operations and employees around the globe.

In the third quarter of 2011, the company reported a three-month loss of $222m, its ninth quarterly loss in three years.

However, despite the problems, Kodak does have assets that could point to a more viable future.

Analysts said the patents could fetch between $2bn and $3bn if the company can find the right buyer.

At the same time, the firm has been keen to stress that its inkjet printer and inks unit is performing well. Third-quarter sales rose by 44% from the same period a year earlier.

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