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Published on 5/5/2006 in the Prospect News Bank Loan Daily, Prospect News Convertibles Daily and Prospect News High Yield Daily.

Moody's considers Kodak downgrade

Moody's Investors Service said it placed the ratings of the Eastman Kodak Co. on review for possible downgrade, including the B1 corporate family rating, the B2 senior unsecured rating and the Ba3 rating on the senior secured credit facilities.

The review is prompted by the company's May 4 announcement to explore strategic alternatives for its Health Group, including its potential divestiture, declining Kodak Health Group digital and traditional revenue and earnings, and a Consumer Digital Group revenue decline and an increased operating loss for the quarter ended March 2006.

The review will focus on prospects for debt reduction, incremental restructuring, and digital and film business revenue and earnings. While the company has not made a definitive decision to sell Kodak Health Group, depending on the sale decision, the company may have to either achieve lender consent or pay down outstanding secured term loan drawings, the agency said.

The company had $1.2 billion drawn under its term loan at March 31. In addition, the company stated that it will likely draw up to $500 million under its secured delayed-draw term loan to refinance a $500 million June 2006 unsecured note maturity.


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