“It is an unusual deal, maybe the first of its kind,” says Laura Quatela, president of the Eastman Kodak Company and its personalised imaging business. The deal, which should allow Kodak to emerge from bankruptcy protection, will see the firm sell its personalised imaging and document imaging businesses to its own UK Kodak Pension Plan (KPP).
The KPP is a “defined benefit pension plan” for current and former Kodak employees (6230 deferred members and 8610 pensioners), with assets of around £1bn and a deficit of around £1.9bn.[bjp_ad_slot]
As part of the agreement, the current pension scheme will close and members will be offered the chance to join a new scheme.
KPP will take ownership of both Kodak’s legacy businesses for $650m, while dropping more than $2.8bn of claims it has filed against Kodak. KPP will use both businesses to finance the pensions of the 14,840 plans it manages.
“The Kodak Pension Plan in the UK is Eastman Kodak’s largest creditor in its bankruptcy,” Quatela tells BJP. “In one way or another, that liability needed to be addressed. I think this agreement made a lot of sense. We think of it very much as a win-win for the KPP and its membership, for Kodak and for the new company that will be created.”
Kodak also expects the deal will enable Kodak’s film business to strive. “The members of the KPP are both former and current Kodak employees, and so under their ownership, we have their commitment to the legacy and history of Kodak,” says Quatela. “We have a financially stable owner that is very much committed to investing in our success.”
Quatela adds that the new company has no plans to discontinue any of Kodak’s film and paper products. “We’re continuing in a normal manner. These two businesses are actually quite strong. They have been performing really well. They generate $1.4bn in revenues. It’s a revenue stream that KPP can rely on in the future.”
Kodak expects that more than 3600 employees will move to the new entity. The deal comes after months of a bidding war for Kodak’s film and paper businesses, which, Quatela tells BJP, attracted a strong number of photographic and technology companies and private investment firms.
While a deal with such an organisation might have brought more money to the table, Kodak’s deal with KPP also allows the legacy firm to eliminate the $2.8bn of liabilities. “Kodak is now placed to emerge from bankruptcy a little quicker than originally planned.”
A Kodak spokeswoman confirmed to BJP that the firm is expected to file its plan of emergence from bankruptcy protection on 30 April.