Kodak to Spin Off Imaging Unit, Moving a Step Closer to Solvency
Eastman Kodak and its largest bankruptcy creditor, the U.K. Kodak Pension Plan (KPP), have agreed to a deal in which KPP will provide Kodak $650 million in cash and non-cash consideration for its Personalized Imaging and Document Imaging businesses, the company announced today.
In addition to the sale of the business unit, the two sides have agreed to void approximately $2.8 billion in outstanding legal claims KPP had brought against Kodak as part of its ongoing bankruptcy proceedings.
The U.K. Pension Regulator has signed off on the arrangement, and Kodak intends to submit paperwork to the U.S. Bankruptcy Court on or around April 30 in an effort to gain the court's approval of its deal with KPP. Kodak intends to use part of the proceeds from the sale to fund its efforts to emerge from bankruptcy protection.
Kodak CEO Antonio Perez said, "The KPP transaction moves us past several key hurdles in our reorganization, resolving all potential claims worldwide." Perez added the deal will provide Kodak with, "the remaining liquidity we require to emerge from Chapter 11."
A KPP spokesman was quoted as saying: "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 KPP is a defined-benefit pension plan which was closed to new members on July 1, 2006. It has assets of about 1 billion pounds and a deficit on a buy out basis of about 1.9 billion pounds.
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