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Kodak offloads its film and scanner businesses to its UK pension group

Jon Fingas
Reporter
Updated ·4 min read
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Kodak may have offered to sell key parts of its document imaging unit to Brother for $210 million, but even that amount is just a small step on the company's long road out of bankruptcy. The company has been looking for a sweeter deal -- and it just found one by settling with its very own UK Kodak Pension Plan. The agreement offloads control of both the document and personal imaging units (read: scanners and film) in return for eliminating a hefty $2.8 billion in claims and receiving $650 million in 'considerations' that include cash. Kodak has already received approval from the UK's Pension Regulator and expects to submit its plans to a US bankruptcy court on Tuesday. We've also confirmed with Kodak that this will supercede the Brother deal as long as it's approved, so there shouldn't be any legal entanglements from changing suitors. As such, Kodak is well on its way to a healthier (if much smaller) company.

[Image credit: Pittaya Sroilong, Flickr]

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Kodak Announces Comprehensive Settlement with U.K. Pension Plan, Moving Kodak toward Exit from Chapter 11

Agreement Spins Off Personalized Imaging and Document Imaging Businesses to KPP, Settles $2.8 Billion in KPP Claims, and Funds Emergence of Commercial Imaging Business from Chapter 11

ROCHESTER, N.Y., April 29 --

Eastman Kodak Company today announced a comprehensive settlement agreement with the U.K. Kodak Pension Plan (KPP), its largest creditor, with respect to its Chapter 11 Plan of Reorganization. Under the agreement, which will be filed with the U.S. Bankruptcy Court, Kodak's Personalized Imaging and Document Imaging businesses will be spun off under new ownership to KPP.

The settlement agreement provides, among other things, for the spin-off of Kodak's Personalized Imaging and Document Imaging businesses to KPP for cash and non-cash consideration of $650 million.Certain proceeds will be used to support the emergence of Kodak from Chapter 11 and the growth of its Commercial Imaging business. The agreement also settles approximately $2.8 billion of claims by KPP against Kodak and certain of its affiliates.

"In one comprehensive transaction, Kodak will realize its previously announced intention to divest its Personalized Imaging and Document Imaging businesses and settle its largest legacy liability," said Antonio M. Perez, Kodak Chairman and Chief Executive Officer. "The KPP transaction moves us past several key hurdles in our reorganization, resolving all potential claims worldwide, assuring continued operations outside of the United States, placing our Personalized 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. 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."

Steven Ross, Chairman of KPP, said, "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 businesses that we are acquiring will deliver long-term cash flows to support the plan's obligations. The financial stability that KPP will provide for the Personalized Imaging and Document Imaging businesses will be beneficial to those businesses' employees, customers and partners."

The agreement will be implemented as part of Kodak's Chapter 11 plan in the United States. At consummation of the spin-off, Kodak and its worldwide affiliates will be released from their obligations to KPP.The UK Pensions Regulator ("the Regulator") has been kept fully informed of this process and the Regulator has granted clearance in respect of the acquisition. The Regulator has decided that it will approve the release of Kodak Limited, the KPP's sponsoring employer, from its liabilities to the KPP and the UK Pension Protection Fund has confirmed that it has no objection. Closing of the transaction is subject to the approval of the U.S. Bankruptcy Court, approval by the Regulator and the satisfaction or waiver of other conditions precedent.

Kodak intends to file a draft Chapter 11 plan with the Bankruptcy Court on April 30, and to seek approval of the KPP settlement and related transactions promptly thereafter, withdrawing the previously-filed motion for the standalone sale of the Document Imaging business.