Kodak bankruptcy action 'won't affect New Zealand'

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LATEST: An application for bankruptcy protection by United States-based Eastman Kodak Co will not affect Kodak-branded branches in New Zealand or the company's distribution network in this country.

A Kodak spokesperson in Sydney said the Australasian subsidiary expected that Eastman Kodak's financial woes would "not have any impact on commercial relationships with Kodak operations based outside of the US".

"Kodak's non-US entities will continue to pay all invoices on time, and meet all contractual obligations."

Non-US subsidiaries are also not subject to court supervision.

BusinessDay understood Kodak closed its New Zealand office five years ago and was now run primarily from an office in Melbourne.

Kodak was believed to support about 60 stores across New Zealand with its Kodak Express shop branding and slightly discounted photographic supplies - such as film and photo paper - in exchange for a fee.

Kodak Express stores were independently owned and operated and one owner, who did not want to be named, said if Kodak's bankruptcy proceeded it would not mean a huge change for his business.

A former Kodak-aligned store owner, Denzil Pinto from Ponsonby's Benchmarque Photos, said he had seen the writing on the wall when Kodak moved its operations to Australia.

"With all the competition that was coming into the [photography] market from the likes of Sony and mobile phone manufacturers and so on, they weren't keeping up," Pinto said.

"They were a large company and sometimes you find that the larger the company the more time it takes to respond - something like a supertanker trying to turn around.

"The first to suffer obviously was the film and paper [products] which they made the bulk of their money on and following that were the film cameras, and then with the digital cameras they had so much competition from the Japanese in particular that they simply were not able to stand up to it."

The company's local website said Kodak products were first marketed in New Zealand around 1900 when Eastman Kodak New York supplied film and equipment through an independently owned Australian distributor.

In 1911, Kodak (Australasia) Pty Ltd was formed and a branch office set up in Wellington.

In 1934, Kodak New Zealand Limited was founded as an independently operated wholly owned subsidiary of Kodak Australia.

Kodak now employs 17,000 people worldwide, down from 63,900 just nine years ago.

"It is a very sad day even though we had anticipated it happening," said Shannon Cross, an analyst at Cross Research who has had a "sell" rating on the company since 2001. "If it emerges, it will be a much smaller entity."

According to papers filed with the US bankruptcy court in Manhattan, Kodak had about US$5.1 billion (NZ$6.3b) of assets and US$6.75 billion (NZ$8.4b) of liabilities at the end of September.

In court documents, Chief Financial Officer Antoinette McCorvey said, without elaborating, that Kodak planned to sell "significant assets" during the bankruptcy. Non-US units were not part of the Chapter 11 case.

Kodak also obtained a US$950 million (NZ$1.183b), 18-month credit line from Citigroup so it could keep operating during the bankruptcy process, which it expected to complete in 2013.

Kodak chairman and chief executive Antonio Perez said he saw the move as a business transformation.

"At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003.

"Now we must complete the transformation by further addressing our cost structure and effectively monetising non-core IP assets.

We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company."

Kodak's market value has sunk to below US$150 million (NZ$186m) from US$31 billion (NZ$38b) 15 years ago. Its shares began trading on Thursday on the Pink Sheets. In early afternoon trading, they were flat 36 US cents.