Eastman Kodak Company has concluded a settlement agreement with its UK Kodak Pension Plan (KPP).
Under the agreement, which will be filed with the US Bankruptcy Court, the company’s personalised imaging and document imaging businesses will be spun off under new ownership to KPP for a cash and non-cash consideration of $650 million (£420 million).
Certain proceeds will be used to support the emergence of Kodak from Chapter 11 bankruptcy and the growth of its commercial imaging business. The agreement also settles approximately $2.8 billion (£1.8 billion) of claims by the defined benefit (DB) pension plan against Kodak and certain of its affiliates.
The Pensions Regulator (TPR) has been kept fully informed of the process and has granted clearance in respect of the acquisition. TPR has decided that it will approve the release of Kodak, the KPP’s sponsoring employer, from its liabilities to the KPP. The Pension Protection Fund (PPF) has confirmed that it has no objection.
Antonio Perez, chairman and chief executive of Kodak, said: “In one comprehensive transaction, Kodak will realise its previously announced intention to divest its personalised imaging and document imaging businesses and settle its largest legacy liability.
“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 recognises 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 result.”
Steven Ross, chairman of KPP, 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 while 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 personalised imaging and document imaging businesses will be beneficial to those businesses’ employees, customers and partners.”
The closing of the transaction is subject to the approval of the US Bankruptcy Court, approval by TPR and the satisfaction or waiver of other conditions precedent.