Kodak is placing its Flexographic Packaging Division up for sale, with plans to pay off outstanding debts as the company is refinancing using a US$400m, 18-month loan.
The company says the US$400m will allow the company to take its time with the sale to maximise shareholder returns, with net proceeds from the sale of FPD first used to repay the loan.
The flexo packaging arm of the company produces its Flexcel NX imaging equipment, printing plates, and consumables. It accounted for US$150m in revenue for the company over the past 12 months, with EBITDA of US$33m. The division employs 300 people, and grew its revenue by nine per cent compared to the previous corresponding period.
During the sale process, Kodak says it will continue to make investments in FPD by expanding manufacturing capacity, developing advanced technology and increasing its headcount to meet customer needs.
In Kodak’s second quarter results, which ended June 30, volume for the Flexcel NX plates grew by eight per cent from the previous year, which was beaten only by growth in its Sonora process-free plates, in which volumes increased by 19 per cent.
Revenue as a whole for the company is down from Q2 2017 results, coming in at US$372m, a decline of US$9m from US$381m.
The company reported second-quarter GAAP net earnings of US$4m and operational EBITDA of US$9m, down US$3 million compared with the second quarter of 2017.
Kodak says the decrease was driven by the US$7m year-over-year adverse impact of the cost of aluminum, partially offset by growth in key products as well as cost reductions in its Advanced Materials and 3D Printing Technology Division.
[Related: Kodak launches Nexfinity Digital Press]
Jeff Clarke, CEO, Kodak, says, “This is a great opportunity to unlock value for shareholders given the strong interest we have received in the Flexographic Packaging Division. FPD has performed exceptionally well over the past five years and has become a significant player in the industry. This business is an excellent example of Kodak incubating and bringing disruptive innovation to the marketplace. Kodak has been evaluating monetisation opportunities for the last several years in order to deleverage the company and we believe this is right time to monetise this valuable asset.
“Following this transaction, Kodak’s improved capital structure will allow us to increase our focus on demonstrated growth engines, while continuing to invest in and provide solutions across the commercial printing, film, and advanced materials industries.”
Kodak says it will continue to focus on the demonstrated growth areas of Sonora environmental plates, enterprise inkjet, workflow software and brand licensing.
A spokesperson says, “Each of these businesses has delivered growth, profitability and strong margins. Kodak is well positioned for the future by leveraging these growth engines and continuing to maximise value in print systems, film and advanced materials.”
Despite being in a process to sell its flexo packaging division, Kodak has launched its Global Flexo Innovation Awards 2018, which celebrate the 10th anniversary of its Flexcel NX System.
The competition invites entries from prepress providers, printers or brands from all over the world. It is open to any commercial packaging project printed with Flexcel NX plates.
An independent panel of judges comprised of experts representing all players in the flexo and packaging value chain will assess the entries submitted. Chaired by flexo expert Pier Luigi Sassanelli, the panel will also include Philippe Roulet, former head of packaging material and training at Nestlé; Sebastian Longo, managing director of Fotograbados Longo S.A. Argentina; Bernhard Stradner, director, Sales at Allstein; Chris Horton, former senior vice president of SGS; Ken McGuire, research fellow at Procter & Gamble; and Jean-Paul Duquet, director of sustainability, Flexible Packaging Europe.
Chris Payne, president, Flexographic Division, vice president, Kodak, says, “The Global Flexo Innovation Awards are designed to honour companies who, through their commitment to excellence using Flexcel NX Plates, have played a significant part in the spectacular rise of flexographic printing over the last 10 years.
“At the same time, the awards are a celebration of the journey we are on; they clearly demonstrate the Flexcel NX technology’s potential to help users gaining additional business opportunities by further improving efficiency, quality and sustainability to continue to fuel the industry transformation and raise the flexo standards.”
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at [email protected]
Sign up to the Sprinter newsletter