Kodak has already filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code last year.
On April 30, according to Beijing Time, Kodak, the bankrupt image product provider, announced on Monday that it would sell its two remaining imaging businesses to its UK pension fund for $650 million.
This transaction must be approved by the Manhattan Bankruptcy Court before it can proceed. Through this transaction, Kodak also settled a lawsuit claim of approximately $2.8 billion filed against the company by the UK pension fund. Kodak CEO Antonio Perez issued a statement saying that this settlement agreement ensures that Kodak will continue to operate business activities outside the United States. Recently, Kodak has been trying to sell most of its consumer and document imaging businesses and shift the company's focus to commercial imaging business.
The two businesses Kodak plans to sell are the personal imaging business (including most consumer products and retail print shops) and the document imaging department (which produces scanners for corporate customers). Kodak's commercial imaging department includes its graphic communication, film, and specialty chemicals products. Through the sale of these two businesses, Kodak's UK pension fund will take over approximately 3,200 full-time employees of Kodak, roughly one quarter of the company's 13,000 global employees. Kodak refused to disclose on Monday how many of the 3,500 local employees in the UK will become part of this asset sale transaction.
Perez said in a statement today that this asset sale transaction allows us to overcome several key obstacles we have recognized, settle all potential lawsuits globally, provide new owners for our personal imaging business and document imaging business who recognize the value of these businesses and are committed to driving their growth and success, while providing us with the necessary remaining liquidity to exit the bankruptcy protection process.
John Kiely, spokesperson for Kodak UK Pension Plan (KPP), stated that this fund will not directly operate the two businesses Kodak sells to it but will form a management team to run these businesses. Steve Ross, chairman of KPP, issued a statement saying that Kodak's personal imaging business and document imaging business will generate long-term cash flows to support the obligations of this plan. The financial stability provided by KPP will benefit the employees, customers, and partners of the personal imaging business and document imaging business.
Kiely said that KPP has not yet developed specific plans for the personal imaging business and document imaging business, such as how the fund will develop these two businesses; however, this fund is engaging in discussions with existing management personnel of these business units to anticipate their future prospects. He stated that KPP is confident that the personal imaging business and document imaging business will achieve growth. He pointed out that the managers of this fund have clearly conducted a thorough due diligence process.
The latest deal reached between Kodak and the KPP Fund means that the plan announced earlier this month to sell its document imaging business to Japanese electronics company Brother will become invalid. Kodak had previously indicated that although the company had announced an agreement with Brother, if better offers emerged, Kodak could seek a better deal. Once these two businesses are sold, Kodak will become a company mainly focused on commercial printing business, selling digital printers and related equipment and consumables. In addition, Kodak will retain its entertainment imaging business, which primarily provides film products used for animation and TV drama production.
Kodak spokesman Christopher Veronda said that according to the terms of the KPP transaction, Kodak will continue to own and operate part of the Eastman Business Park business involved in film production because this department is mainly responsible for handling the entertainment imaging business. Through this business, Kodak can produce personal or professional films for the KPP Fund. Meanwhile, as part of this asset sale transaction, Kodak's color photographic paper factory located in Harrow, UK, will also be sold.
In the previous month, Kodak revised its financing agreement, requiring the company to raise at least $600 million through the sale of non-commercial imaging assets. Kodak launched its first camera product in 1888 but failed to successfully transition to the digital imaging market in modern times, forcing it to file for bankruptcy protection last year. Market rumors had previously claimed that Kodak had set Tuesday as the deadline to submit a plan to the US Bankruptcy Court detailing how the company plans to exit the bankruptcy protection process. This plan will include the compensation amount per dollar that Kodak's individual creditors will receive.