Moody's Lowers Eastman Kodak Ratings
Moody's Investors Service lowered all ratings of Eastman Kodak Company, including: the corporate family and probability of default to Caa2 from Caa1, the senior unsecured to Caa3 from Caa2, the senior secured to B3 from B1 and the Speculative Grade Liquidity rating to SGL-3 frm SGL-2. The outlook remains negative.
The rating downgrade reflects our expectations that "ongoing weakness in the company's core business operations in addition to a softening demand environment will pressure operating performance and liquidity over the foreseeable future," said Moody's senior vice president, Richard Lane. Kodak's decision on September 23, 2011 to draw down $160 million from its $400 million secured revolving credit facility signals weaker cash flow prospects, as the draw was just prior to what is usually Kodak's strongest cash flow quarter (the 4th quarter).
Although Kodak had $957 million of cash balances at June 30, 2011 and no material debt maturities until November 2013, "we anticipate that Kodak will consume cash over the next year, thus weakening its liquidity profile," said Lane.