Kodak to sell imaging businesses to U.K. pension plan for $650 million

By Caroline Salls

Pittsburgh, April 29 - Eastman Kodak Co. reached a comprehensive settlement with its largest creditor, the U.K. Kodak Pension Plan (KPP), according to a company news release.

Under the agreement, Kodak's personalized imaging and document imaging businesses will be spun off under new ownership to KPP for cash and non-cash considerations of $650 million.

The company said some proceeds will be used to support its emergence from Chapter 11 and the growth of its commercial imaging business.

The agreement also settles $2.8 billion of claims filed by KPP against Kodak and some 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," chairman and chief executive officer Antonio M. Perez said in the release.

"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."

KPP chairman Steven Ross said in the release, "Overall, this settlement gives the KPP members greatly improved future prospects whilst being good for Kodak's employees, its creditors and for U.K. businesses.

"The businesses that we are acquiring will deliver long-term cash flows to support the plan's obligations."

According to the release, the agreement will be implemented as part of Kodak's Chapter 11 plan.

The company said the U.K. pensions regulator has granted clearance for the acquisition. Specifically, the regulator has decided that it will approve the release of Kodak Ltd., the KPP's sponsoring employer, from its liabilities to the KPP, and the U.K. Pension Protection Fund has confirmed that it has no objection.

Closing of the transaction is subject to bankruptcy court approval, approval by the regulator and the satisfaction or waiver of other conditions.

Kodak said it intends to file a draft Chapter 11 plan with the U.S. Bankruptcy Court for the Southern District of New York on Tuesday.

In addition, the company has withdrawn its motion for the stand-alone sale of the document imaging business.

Kodak is a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets. The company filed for bankruptcy on Jan. 19, 2012 under Chapter 11 case number 12-10202.

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