Eastman Kodak Co. (EKDKQ) reached a deal to turn over the
camera-film business that helped make it a blue-chip company and
other enterprises to U.K. retirees in exchange for wiping out
pension obligations, said people familiar with the matter, in a
deal that sets the stage for the onetime photography icon to emerge
from bankruptcy proceedings later this year.
Under the contours of the deal, Kodak will hand over to the U.K.
Kodak Pension Plan, its largest creditor, its "personalized
imaging" and "document imaging" businesses, the people said. The
pensioners will then be able to either run the businesses or sell
them as they see fit. Kodak will no longer owe the pensioners $2.8
billion, a large sum that threatened to complicate the Rochester,
N.Y., company's efforts to reorganize, the people said.
Kodak also will receive some cash and other value, together
worth $650 million, from the pensioners as part of the deal, which
has been in the works since December 2011, one of the people said.
The cash amount is expected to be revealed when Kodak files a
reorganization plan with a federal bankruptcy court in Manhattan as
soon as Tuesday, the people said.
Kodak already had reached a tentative deal April 15 to sell
document imaging assets to Brother Industries Ltd. (BRTHY, 6448.TO)
for roughly $210 million. But the deal isn't yet approved by a
bankruptcy judge and can be abandoned by Kodak if the company can
get a so-called "bundled transaction," the people said. A
representative for Brother wasn't immediately reached.
Kodak put the camera-film business and other businesses,
including kiosks that develop digital photos and heavy-duty
commercial scanners, on the block in August as part of a downsizing
effort aimed at focusing on commercial printing, packaging and
functional printing. After the shut down of the company's
desktop-printer unit in September, Kodak's future is now pinned on
selling printing equipment and services to companies.
The $2.8 billion in pension obligations and the sale of the
businesses were among the final outstanding issues keeping Kodak in
bankruptcy court.
A bankruptcy judge earlier this year approved Kodak's deal to
sell a portfolio of 1,100 digital patents for $527 million. Though
a lower price than Kodak hoped, the deal also involved the
buyers--including Apple Inc. (AAPL), Google Inc. (GOOG) and
Microsoft Corp. (MSFT), agreeing to end contentious patent
litigation.
With the transfer of its traditional camera-film business and
other enterprises, Kodak will cement a long fall from a
technological titan included in the Dow Jones Industrial Average
from 1930 until 2004. Despite inventing the digital camera, Kodak
has been slow to adapt to new technologies and ended up filing for
bankruptcy protection in January 2012 amid a cash crunch.
Write to Emily Glazer at Emily.Glazer@wsj.com and Mike Spector
at Mike.Spector@wsj.com
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