Eastman Kodak Co agreed to sell its digital imaging patents for about $525 million, a key step to bringing the photography pioneer out of bankruptcy in the first half of 2013.
The deal for the 1,100 patents allows Kodak to fulfill a condition for securing $830 million in financing that gets the company closer to emerging from bankruptcy.
The patent deal was reached with a consortium led by Intellectual Ventures and RPX Corp. A portion of the purchase price will come from 12 intellectual property licensees.
The company still must sell its personalized and document imaging businesses as part of the financing package, and also has to resolve its UK pension obligation.
Kodak said the patent deal puts it on a path to emerge from Chapter 11 in the first half of 2013.
"Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company," said Antonio Perez, chairman and chief executive officer of the Rochester, New York-based company.
The patent portfolio was expected to be a major asset for Kodak when it filed for bankruptcy in January. An outside firm had estimated the patents could be worth as much as $2.6 billion.
Kodak's patents hit the market as intellectual property values have soared and technology companies have plowed money into patent-related litigation.
For example, last year Nortel Networks sold 6,000 wireless patents in a bankruptcy auction for $4.5 billion.
Kodak said in June that 20 potential bidders had signed confidentiality agreements and it expected to announce a winning bidder by Aug. 13.
Although it did not live up to the rosy forecasts, Kodak still sold the patents for more than the $500 million required to secure its new financing.
Kodak traces its roots to the 19th Century and invented the handheld camera. But it has been unable to successfully shift to digital imaging.
It will likely be a different company when it exits bankruptcy, out of the consumer business and focused instead on providing products and services to the commercial imaging market.
The patent sale is subject to approval by the U.S. Bankruptcy Court in Manhattan.
The Kodak bankruptcy case is in Re: Eastman Kodak Co. et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.