Eastman Kodak

Eastman Kodak saw its credit rating downgraded to “CCC” from “CCC+” by S&P Global Ratings.

S&P also downgraded its outlook for the company to “negative,” citing its view that Eastman Kodak will be “challenged” to monetize assets, reduce debt, and meet the 2019 maturity of its term loan without a substantial improvement in operating performance.

“The negative outlook reflects our view that Eastman Kodak’s current capital structure is unsustainable due to increased refinancing risk, particularly with respect to the company’s first-lien secured term loan due September 2019.

“As a result, we believe Kodak is subject to increased risk of undergoing a restructuring under terms that we would consider to be distressed,” S&P stated.

“Furthermore, while the firm has announced its intention to pursue asset sales or divestitures in order to bolster liquidity, no successful transaction have been executed thus far,” the ratings company said.

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S&P said there was a material risk Eastman Kodak would be unable to refinance the $395 million outstanding term loan.

The company reported that its cash balance declined 17% year over year.

In its first-quarter results, it also reported flat revenue growth and weaker profitability (a net loss of $25 million) compared with a year ago.

Eastman Kodak has reported negative operating cash flow in four of the past six quarters.

“Our use of cash for the first quarter was in line with our expectations and significantly improved from the same period a year ago,” said David Bullwinkle, Kodak’s finance chief, earlier this month. “We have meaningfully improved productivity and are on track to deliver over $50 million year-on-year cost savings in 2018.”

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