Eastman Kodak Co., Rochester, N.Y., agreed to spin off two business units to the £1 billion ($1.5 billion) U.K. Kodak Pension Plan, its largest creditor, confirmed Christopher Veronda, a company spokesman.
The spinoff is part of the company's bankruptcy reorganization, and a draft reorganization plan is expected to be filed with the U.S. Bankruptcy Court in New York on Tuesday, Mr. Veronda said in an interview Monday. The company filed its Chapter 11 petition in January 2012.
As part of its settlement with the U.K. pension plan, Eastman Kodak will spin off its personalized imaging and document imaging businesses to the pension plan for $650 million and “non-cash considerations,” according to an Eastman Kodak news release issued Monday.
The Birmingham-based U.K. pension plan was closed to new members in July 2006 and closed to future accruals on March 31, 2012, the news release said.
“Certain proceeds (from the spinoff) will be used to support the emergence of Kodak from Chapter 11 and the growth of its commercial imaging business,” the news release said. “The agreement also settles approximately $2.8 billion of claims by (the U.K. pension plan) against Kodak and certain of its affiliates.”
After Eastman Kodak files its draft reorganization with the bankruptcy court, it will seek approval of the U.K. pension plan settlement and “related transactions promptly thereafter,” the news release said.
“The terms of the settlement reached give the members of the UK Kodak Pension Plan the best outcome that could be achieved in Kodak's current circumstances,” the news release said. “The businesses that the trustees (of the U.K. pension plan) are acquiring have significant value and will develop, which will be good for their employees, customers and suppliers.”