Eastman Kodak (NYSE: EK) is in talks to raise $900 million from investors. It is a perfect chance for financiers and the board to replace CEO Antonio Perez, who has run the company since 2005. That is long enough, given the results of his tenure.
The Wall Street Journal reports: “Since about mid-September, Kodak has held discussions with Cerberus Capital Management LP, Silver Point Capital LP, Centerbridge Partners LP and Highbridge Capital Management LLC.” Kodak has continued to try to sell its patents for a large sum of money. That process has not worked for reasons that are not apparent to Wall St.
There are a list of companies where the resignation of the CEO would help the share price and investor confidence in the corporation. Kodak is certainly one of those.
There are a small number of candidates within Kodak who could take the job. First among these is chief marketing officer Pradeep Jotwani. He has a management background as a senior executive at Hewlett-Packard’s (NYSE: HPQ) imaging group. He has only been at Kodak since 2010, which means he has not been a part of the culture of failure that has been part of the company for years. Few of Kodak’s board members have impressive credentials. Dennis F. Strigl, a former senior executive of Verizon (NYSE: VZ), is the exception. The attractiveness of both men is that Kodak does not have time to create a search committee of its board that would take months to find a new replacement. Such a plan would almost certainly leak, which would cause more uncertainty about Kodak’s future.
Kodak’s lenders and possible hedge funds that might offer the company more capital have leverage now. They have the ability to tell Kodak’s board that they will be more liberal with terms and put less pressure on the firm to fix what is wrong immediately. In exchange they can say they want a new chief executive, they could insist.
It is not unusual for shares in a troubled companies to rise with the appointment of a new chief executive. In Kodak’s case a recovery could be almost assured. Its shares trade at $1.28 down from a 52-week high of $5.95. The stock has dropped as low as $.54 recently. No one wants Perez at the helm. It is time for Kodak’s board to realize that and act accordingly.
Douglas A. McIntyre