It was one of the pioneers of the digital camera, inventing several of the patented technologies that evolved into what we know today. But somehow, Eastman Kodak fell behind its competitors, and now languishes in a state of near-bankruptcy. All is not lost, however: on Wednesday it was announced that the firm is to sell of an arm of itself to its own pension fund for $650m, in return for the fund dropping lawsuits of about $2.8bn against it.
The deal would mean that the company could finally start working on getting itself out of Chapter 11 Bankruptcy Protection (a state of near-bust for US companies) and the trustees of the fund have agreed the deal in principle. The next hurdle is to get it approved by US courts, and if they go for it, it will mean that it is not left to the UK’s Pension Protection Fund (a government deal that helps insure pensions schemes when employers are going down the toilet). That would certainly be good news for the UK taxpayer.
Kodak Pension Plan, which is the name of the fund in question and the biggest single creditor to Kodak, will pay $650m for business. Steven Ross, the chairman of the pension fund said that ‘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.’
Chairman and chief exec of Kodak, Antonio Perez, said: ‘The KPP transaction moves us past several key hurdles in our reorganization, resolving all potential claims worldwide, assuring continued operations outside of the United States, placing our Personalized Imaging and Document Imaging businesses with a new owner that recognizes their value and is focused on their growth and success, and providing the remaining liquidity we require to emerge from Chapter 11.’
So what will Kodak be left doing? Well it also has print and publishing businesses that are doing better, and at least with a huge chunk of debt lifted, it may now stand of chance of getting some decent profitability out of the remaining divisions.