*NEWS*KODAK’S (NEGATIVE/A-3) RATING

[Anonymous]

Kodak ratings unaffected by NexPress deal-S&P
Monday March 8, 4:55 pm ET 

 

NEW YORK, March 8 – Standard & Poor’s Ratings Services said that Eastman Kodak Co.’s (NYSE: color=#0000ff EK – color=#0000ff News; BBB-/Negative/A-3) Ratings and outlook will not be affected by its agreement to buy the 50% of its NexPress joint venture it does not own and other related digital printing operations from Heidelberger Druckmaschinen AG. The purchase broadens Kodak’s participation in the emerging commercial digital printing industry, an area it has targeted for expansion. Acquired businesses include NexPress’ high-quality, on-demand color commercial printing systems; Heidelberger’s high-end, variable data, black and white printers; and related assets. The acquisition is expected to generate moderate losses through 2007, with losses narrowing each year. These operations will be integrated with Kodak’s other commercial printing businesses and result in some restructuring charges. Cash consideration will be based on the new unit’s performance through Dec. 31, 2005, with a maximum price of $150 million. There is also an additional sales-related, five-year earn-out if certain targets are achieved. Kodak’s ability to pursue acquisitions at the current rating has been enhanced somewhat by its pending sale of its non-core Remote Sensing Systems unit, which is expected to provide net cash proceeds of about $475 million. Kodak is still expected to reduce debt by at least $600 million in 2004 and its pace of acquisitions in 2004 is expected to slow meaningfully. The negative outlook continues to reflect concern about the deterioration of Kodak’s key film-based consumer imaging unit, its aggressive acquisition strategy, uncertainty about the profit potential of its digital imaging initiatives, and the company’s large unfunded postretirement liabilities

[Author]

March 9, 2004 at 10:40 AM