Kodak pulls U-turn on reorganization, now plans spin-offs to its own pension plan
posted Monday, April 29, 2013 at 9:57 PM EDT
To say the situation at Eastman Kodak Co. is in a state of flux would be putting it mildly. Just two weeks after the company announced plans to sell its document imaging business to printer manufacturer Brother Industries, it's pulled an abrupt U-turn, cancelling that deal and announcing another in its stead. The new owner of both the document imaging and personalized imaging businesses -- at least, assuming the deal meets approval -- is rather interesting.
Essentially, Kodak is killing two birds with one stone by selling both businesses to it own United Kingdom-based pension plan, which is also its largest creditor. By selling the business divisions to the pension plan, Kodak aims to make good on some of the claimed US$2.8 billion due to the plan. Around one-quarter of the company's total workforce would be transferred to the newly spun-off businesses, according to the Rochester Democrat and Chronicle.
At the same time, Kodak would raise some much-needed cash, as between the two businesses it will receive a US$650 million payment, paid only partially in cash. That money would be helpful in exiting bankruptcy as a viable concern in the commercial imaging business, with a sideline in entertainment imaging
The new entities would retain the right to trade in Kodak's name, ensuring the company's brand remains at retail on photo kiosks and the like. More details in the official press release from Kodak announcing the news.
(Kodak sign image courtesy of Viktor Nagornyy / Flickr, used under a CC BY 2.0 license.)