Kodak to sell two imaging units to UK pension plan for $650 mn

Photography icon Eastman Kodak yesterday said that it would spin off its document and personal imaging units to its UK pension plan for $650 million in exchange for writing off pension obligations to the tune of around $2.8 billion.

The latest move will see the Rochester, New York-based company scrap its earlier tentative plan of selling its document imaging business to Brother Industries of Japan for around $210 million, and instead hand over control of its camera-film and document-imaging businesses to its largest creditor – the UK Kodak Pension Plan (KPP), in order to settle its pension obligations.

The deal, which has been by approved by the UK's pension regulator, but needs the nod of the US bankruptcy court, would possibly see the 131-year-old company exit from bankruptcy.

Although the deal will see the 15,000 members of KPP forced to accept reduced benefits, Steven Ross, chairman of KPP, said despite the businesses being valued at $650 million, ''the cash flows they generate over the next years suggest to us that we have a very high chance of success in meeting the benefits that members would get in the new KPP.''

''In one comprehensive transaction, Kodak will realise its previously announced intention to divest its personalised imaging and document imaging businesses and settle its largest legacy liability,'' Antonio Perez, Kodak's chairman and CEO, said in a statement.

The personalised imaging business consists of retail systems solutions (RSS), paper and output systems (P&OS) and event imaging solutions (EIS).

RSS is the worldwide leader in retail print solutions with a global footprint of 105,000 Kodak Picture Kiosks, while P&OS includes a portfolio of traditional photographic paper and still camera film products, and EIS provides souvenir photo products at theme parks and other venues.

The document imaging business holds a portfolio of scanners, capture software and services to enterprise customers.

Kodak earns $1.3 billion a year from its personalised imaging businesses and around $466 million annually from its document imaging business.

The sale of these units will leave Kodak with the consumer inkjet, entertainment imaging, commercial film and specialty chemicals businesses, which have cash-generating capability.

The company, which once ruled the world of photography, had in January 2012 filed for chapter 11 bankruptcy protection. It had debt of $6.75 billion and assets worth $5.1 billion (See: Photographic film pioneer Eastman Kodak files for bankruptcy protection).

In November 2012, the beleaguered company received an $830-million lifeline to come out of bankruptcy, under the condition that it would sell part of its massive portfolio of patents.

In December it sold some patents for $525 million, much lower than the $2.6 billion estimated by analysts (See: Kodak sells imaging patents for $525 mn).

Since then, Kodak, once a household name that ranked among America's corporate titans, has sold some business, part of its patents, and reduced headcount.

After emerging from bankruptcy, Kodak's plans are to remain a primarily commercial printing company, which sells digital printing presses and related equipment and supplies. It would also have its entertainment imaging business, which sells film for motion picture and television productions and specialty chemicals businesses, all of which have cash-generating capability.