GLOBAL – Eastman Kodak has agreed a settlement on $2.8bn (€2.1bn) worth of claims with its underfunded UK pension plan that will see the scheme take hold of part of its business.
Kodak Pension Plan’s (KPP) claim was triggered after its US parent company filed for Chapter 11 bankruptcy in January last year, leading KPP to file a lawsuit in the US to cover its deficit.
As part of the agreement, KPP’s members will either be allowed to transfer to a new scheme that will offer lower benefits, but still above those offered by the UK Pension Protection Fund (PPF), or remain in the old section and transfer with it to the PPF.
The fund closed to future accrual at the end of March last year and reported an estimated deficit of £1.9bn (€1.4bn) based on the cost of a complete buyout, but only held £1bn in assets.
In a statement, the company said its Personalised Imaging and Document Imaging businesses would be spun off and sold to KPP for cash and non-cash considerations worth $650m, with the deal approved by the UK Pensions Regulator.
The company added: “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 $2.8bn of claims by KPP against Kodak and certain of its affiliates.”
Antonio Perez, chairman and chief executive of Kodak, praised the “dedication and creativity” of KPP in achieving the “extraordinary” settlement.
KPP chairman Steven Ross said the settlement would greatly improve the prospects for scheme members “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,” he added.
“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.”
Spinning off both companies – which house Kodak’s photo kiosks, its photo paper and film businesses – will relieve any of Kodak’s remaining companies from its obligations towards KPP.
The company statement added that the PPF had not objected to the transaction, and was now only subject to approval from US regulators.