Eastman Kodak, an imaging and photographic company, once believed its portfolio of 1,100 patents would cost around $2.6 billion if sold. Commonly known as Kodak, the beleaguered company expected that the resulting sale of its patents could save itself, but the announcement last Wednesday resulted to the opposite side of things.
Last Wednesday’s announcement saw Kodak getting only $525 million for its imaging patents sold to consortium that includes the world’s large tech companies like Google, Apple, Samsung Electronics, and Facebook.
Officials from Kodak said that the sale of its patents would help in stopping the downward spiral of the company, which has been going on for a decade now.
Kodak’s chief executive, Antonio M. Perez, said: “This monetization of patents is another major milestone toward successful emergence. Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company.”
One of the benefits of the critical sale, according to Perez, was to pay its obligations to the company’s financial debtors. The move would also comply with a major provision for the $830 million financing facility that was approved in November, demanding from Kodak to sell its patents at a minimum of $500 million.
Kodak will be allowed to use the license to use the digital imaging patents in its future businesses, and for its products being sold currently.
A portion of the sale will be paid by the consortium of companies in the technology sector, organized by RPX Corporation and Intellectual Ventures. The buyers will be given rights to the patent portfolio and other patents of Eastman Kodak.
“No single company could have completed this deal and by creating a consortium we were able to ensure that members get access to these important invention rights,” said the Washington-based Intellectual Ventures in a release. “The patent marketplace is very active, and I.V. expects to be involved in more complex transactions like this in the future.”
Perez also underscored the company’s focus in building up its commercial imaging business that includes printing and packaging. Kodak is optimistic about the business it has in mind, citing “significant competitive advantages and strong growth prospects.”
The sale of patents is yet to be approved by a bankruptcy court. Kodak filed for Chapter 11 protection last January. The company then got out of the consumer inkjet printer business, a move by Perez to stem the company’s losses. Kodak also sold its consumer film business, the area which popularized Kodak among millions of households throughout the world.
The company’s spokesman, Christopher K. Veronda, said in an email that the interest in Kodak’s film and document imaging business remains strong among buyers, and that the company is in the process of selling them during the first half of 2013.
Veronda commented that the projected $2.6 billion price of his company’s patent portfolio was made by a third party, mentioned by Kodak in court papers.
“Certainly other recent speculation was around a fraction of the $525 million we received,” Veronda said. “The price paid is always a reflection of what buyers are willing to pay for an asset or a license.”