Eastman Kodak has agreed to hand over part of its business to the trustees of its UK pension plan in a bid to settle a $2.8bn (£1.8bn) claim from the underfunded scheme.
The New York-based photography giant, which is currently in Chapter 11 bankruptcy proceedings, will spin off its personalised imaging and document imaging business to the Kodak Pension Plan (KPP) for a “cash and non-cash consideration” of $650m. This payment would be used to support the growth of the firm’s commercial imaging business and aid its progression out of Chapter 11.
Trustees at the UK scheme are the company’s largest creditor, lodging a $2.8bn claim against the firm last year following its collapse into insolvency in January 2012. Kodak said the agreement settles that claim.
“The KPP transaction moves us past several key hurdles in our reorganisation, resolving all potential claims worldwide, assuring continued operations outside of the United States, placing our personalised imaging and document imaging businesses with a new owner that recognizes their value and is focused on their growth and success, and providing the remaining liquidity we require to emerge from Chapter 11,” said Kodak chairman and chief executive officer Antonio Perez.
“We are very pleased with the transaction, the value it creates for our stakeholders, and the dedication and creativity of KPP that made it possible to achieve this extraordinary result.”
KPP chairman Steven added: “KPP and Kodak have been working collaboratively since the beginning of the case, and this acquisition provides security for and delivers the greatest value to the KPP members. Overall, this settlement gives the KPP members greatly improved future prospects whilst being good for Kodak’s employees, its creditors and for UK businesses.”
The deal was granted clearance by The Pensions Regulator, which has also agreed to approve the release of Kodak from its liabilities to the KPP. The Pension Protection Fund has also confirmed it has no objection.
Kodak intends to file a draft Chapter 11 plan with the Bankruptcy Court on 30 April and will seek approval of the KPP settlement soon after.
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