Kodak Gives Assets to U.K. Retirees

這種善待退休員工的處理方式很值得參考

By EMILY GLAZER and MIKE SPECTOR

Photography icon Eastman Kodak Co. EKDKQ +30.49% laid plans to emerge from a year-plus stretch in bankruptcy court with a deal that turns over two businesses it was trying to shed to unusual recipients: its U.K. retirees.
The Rochester, N.Y., company has been selling assets and shutting businesses since it filed for bankruptcy protection in January 2012 amid a cash crunch. But it didn't have many offers for the camera-film business that helped make it a blue chip, said people familiar with the company.
At the same time, the U.K. Kodak Pension Plan claims Kodak owes it $2.8 billion, a large sum that was threatening to complicate the company's efforts to reorganize, the people said.

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In a deal announced Monday, Kodak will turn over the "personalized imaging" business, which includes camera film, as well as its "document imaging" business, to the U.K. pensioners—its largest creditor—in exchange for a wipeout of the pension obligations. The deal will also yield about $325 million of cash and other value, including various claims worth another roughly $325 million.
After these moves and the shutdown of its desktop-printer unit last September, Kodak's future is now pinned on selling printing equipment and services to companies.
Some of the funds expected to be raised in the shedding of the imaging businesses will be used to support Kodak's emergence from Chapter 11, in addition to the growth of its commercial printing, packaging and functional printing businesses, the company said.
"We satisfied the requirements of our lenders and took care of our document imaging and personalized imaging employees, suppliers and customers," said Becky Roof, Kodak's interim chief financial officer. She said Kodak and the U.K. retirees are already in discussions about how to separate the businesses.
The transaction is subject to approval of the U.S. Bankruptcy Court.
Kodak's U.S. pension obligations are still being sorted out in bankruptcy court with the Pension Benefit Guaranty Corp.
Some people not involved in the deal called it unusual, especially given its size. Assets in a bankruptcy typically get sold to rivals or financiers experienced in running or selling businesses, not pension-plan managers.
"Cash is the currency when you're settling creditor claims because they're really not equipped to run a business," said Rick Chesley, co-chair of law firm DLA Piper's restructuring practice who isn't involved in the situation. But "pensioners might be better equipped [than other creditors] because they are organized and have fiduciary obligations, and governance structures in place."
In the coming months, the U.K. retirees, about 15,000 total, plan to establish a governance structure and hire executives to try to generate cash flows that satisfy pension obligations, among other objectives, said Steven Ross, chairman of the U.K. Kodak Pension Plan. Down the road, KPP could sell the businesses, he added, but it would be at least 10 years off.
Kodak's largest plant in the U.K. is in Harrow, near London, and manufactures color photographic paper and used to make film products, a person close to the company said. The plant was founder George Eastman's first manufacturing plant outside Rochester.
The pension deal has been in the works since December 2011, before Kodak filed for Chapter 11, said Andrew Dietderich, a restructuring lawyer at Sullivan & Cromwell LLP, which has advised the company.
Advisers and representatives for the U.K. retirees made trips to New York every two to three weeks for the past 15 months to negotiate the arrangement, said Mr. Ross.

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During that time, advisers designed roughly 25 different models to determine possible outlooks of the deal and to make sure the pension plan felt "comfortable," he said. "We wanted…to prove the likelihood of this being a success in 10 or 15 years time."
Kodak already had reached a tentative deal April 15 to sell document-imaging assets to Brother Industries Ltd. 6448.TO +0.09% 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 "bundled transaction," such as the U.K. pension deal.
Brother said Monday it was evaluating Kodak's announcement.
In August, Kodak put on the block the camera-film business and other businesses, including kiosks that develop digital photos and heavy-duty commercial scanners. The plan was to cut back and focus on commercial printing, packaging and functional printing.
A bankruptcy judge earlier this year approved Kodak's deal to sell a portfolio of 1,100 digital patents for $527 million. Though the patents fetched a lower price than Kodak hoped, the buyers—including Apple Inc., AAPL +3.10% Google Inc. GOOG +2.20% and Microsoft Corp., MSFT +2.58% agreed to end contentious patent litigation.
Founded in the 1880s, Kodak has fallen far from its days of being a technological titan that for decades—1930-2004—was a component in the Dow Jones Industrial Average. Despite inventing the digital camera, Kodak has been slow to adapt to new technologies and ended up filing for bankruptcy protection amid a cash crunch.
Separately on Monday Kodak reported a quarterly profit of $283 million,or $1.04 a share, compared with a year-earlier loss of $366 million, or $1.35 a share. But the profit came only because of a $535 million gain recorded on the sale of the digital imaging patent portfolio, partially offset by a $77 million non-cash goodwill impairment charge related to the patent sale. The latest period included $120 million in reorganization items, compared with $88 million a year earlier. Revenue fell 8.5% to $849 million.
Gross margin widened to 21.8% from 6.5% as input costs slid 24% to $664 million.
Bottom-line results improved in the commercial imaging and the graphics, entertainment and commercial films segments.
The company's cash balance improved slightly to $1.17 billion at the end of the first quarter from $1.14 billion three months earlier.
Write to Emily Glazer at emily.glazer@wsj.com and Mike Spector at mike.spector@wsj.com

A version of this article appeared April 30, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Kodak Swap Cancels Pensions.