Kodak Retires by Selling to Retirees

If approved by the bankruptcy court, Kodak will soon exit it's Personalized Imaging and Document Imaging businesses by transferring them to its biggest creditor, the Kodak UK Pension Plan. The Personalized Imaging business is the one that makes film and photographic paper, which is why I'm reporting this here.

Under the agreement, the Kodak UK Pension Plan becomes the new owner of those ongoing businesses, with the US$2.8 billion in claims against Kodak negated plus a transfer of US$650 million to Kodak to help it exit bankruptcy. The Pension Plan retains the right to use the Kodak name on its products, and ironically inherits 3200 not retired workers.

The deal is relatively complex and a bit incestuous. Under the disclosed terms, Kodak would actually retain and continue to operate the plant dedicated to film manufacturing. That's apparently because of the movie business film production business, which Kodak will apparently retain out of bankruptcy. Kodak would also use that plant to continue making consumer and professional film for the Pension Plan, who will create a new management team to run the actual sale and marketing of the film products. Meanwhile, another irony is that Kodak's plant in England for color photographic paper would be sold.

It's all as confusing as could be. UK retirees own part of Kodak's business but sell off the UK plant that makes some of the products, Kodak itself doesn't actually sell of its plant but uses it to make products so that the Pension Plan can continue to pay retirees benefits. And somehow US$650 million in cash ends up in Rochester.

Meanwhile, Brother must be upset. They had tentatively agreed to buy the Document Imaging business (which is mostly centered around document scanners) for US$210 million.

Bottom line: if approved, Kodak film and paper should continue to be produced exactly as it has been, but will be managed and sold by a new entity. Phew! Why didn't they just say that?

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