Bankrupt photo company Eastman Kodak Co. has reached an agreement to spin off two of its units to a group of U.K. retirees, thus settling $2.8 billion in claims from the pensioners.
The agreement will send the company’s personalized imaging and document imaging units—including its storied camera-film business—to the U.K. Kodak Pension Plan (KPP). In exchange, Kodak will receive $650 million from KPP, which has also agreed to drop its $2.8 billion claim against the company.
The cash will help Kodak exit Chapter 11 bankruptcy, and will also enable the company to grow its commercial imaging business, Kodak said in a statement. “The KPP transaction moves us past several key hurdles in our reorganization, resolving all potential claims worldwide, assuring continued operations outside of the U.S. … and providing the remaining liquidity we require to emerge from Chapter 11,” Kodak Chairman and CEO Antonio Perez said.
Kodak had previously agreed to sell the document imaging business to Brother Industries Ltd., a Japanese office equipment company, for about $210 million. But Kodak is free to abandon that deal, which has not yet won approval from a bankruptcy judge, if it finds a “bundled transaction” elsewhere, the Wall Street Journal reports.
The U.K. Pensions Regulator has approved the KPP agreement, but it has yet to be reviewed by U.S. Bankruptcy Court.
For more InsideCounsel coverage of Kodak’s bankruptcy woes, see: