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Why Eastman Kodak Stock Plunged Today

By Evan Niu, CFA - Updated Mar 17, 2021 at 9:43PM

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Eastman Kodak reports 2020 results and files shelf registrations to sell securities.

What happened

Shares of Eastman Kodak (KODK -1.81%) plunged by as much as 11% today after the company reported full-year 2020 earnings results. Eastman Kodak also filed a mixed shelf registration that will allow it to sell securities, while also filing a separate shelf registration that will allow existing shareholders to unload up to 44.5 million shares over time.

So what

Revenue in 2020 declined to $1 billion, which resulted in a net loss of $541 million for the year. The industrials company finished the year with $196 million in cash but recently announced that it had secured access to additional capital to bolster its liquidity position. Eastman Kodak will get $310 million in incremental cash from a series of transactions that involve term loans, convertible preferred stock, and convertible notes.

Red stock chart going down

Image source: Getty Images.

"We mitigated the impact of COVID with cost-saving initiatives, launched several innovative print-business products and generated cash in the third and fourth quarters," CEO Jim Continenza said in a statement. "More recently, we announced a series of financial transactions which significantly strengthened our balance sheet and set the stage for growth through investments in our core businesses in print and advanced materials and chemicals, and new initiatives."

Now what

Eastman Kodak filed two securities registrations. The first includes a variety of different securities that the company can sell to raise up to $500 million in capital. Proceeds from any securities sales will be used for general corporate purposes, according to the prospectus. The second registration relates to 44.5 million shares held by existing shareholders, compared to the 78.5 million shares outstanding as of the beginning of March. Eastman Kodak will not receive any proceeds from those sales.

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