* Deal secures financing, resolves biggest unsecured claim
* Kodak plans to unveil plan of reorganization on Tuesday
* Agreement secures funding for UK pension plan
* Kodak reports first-quarter profit on sale of patents
By Tanya Agrawal and Tom Hals
April 29 Photography pioneer Eastman Kodak Co
on Monday cleared the last two hurdles to ending its
bankruptcy in one leap, with an agreement to sell its remaining
non-core businesses to its British pension fund for $650
The pension plan also agreed to give up a $2.8 billion claim
against Kodak, resolving the largest unsecured claim against the
The agreement is subject to approval by the U.S. Bankruptcy
Court in Manhattan.
"It is a huge step in Kodak exiting from bankruptcy. In
effect, it combines the final two steps that were needed for the
company to emerge," said George Conboy, president of Brighton
Securities Corp. Brighton is a Rochester-based brokerage.
The deal allows Kodak to meet a requirement for securing
financing for exiting its bankruptcy. Lenders required the
company to sell its consumer and document imaging businesses for
at least $600 million.
The two businesses being sold are personalized imaging,
which includes most consumer products and retail printing
kiosks, and its document imaging unit that makes scanners for
Kodak said it will present a plan on Tuesday for its
post-bankruptcy business that will focus on commercial imaging,
which includes its graphic communication, film and specialty
chemical products. The plan will also outline how much creditors
can expect to be repaid.
Also on Monday, Kodak reported a $283 million net profit for
the January-March quarter, compared to a $366 million loss for
the same period a year ago.
The company said the profitable quarter reflected
improvements in its commercial imaging businesses as well as a
$535 million gain from the sale of its digital imaging patents.
"These results demonstrate that we are on track with our
strategy to focus on commercial imaging," said Antonio M. Perez,
Kodak's chairman and chief executive officer in a statement.
The company's cash balance ticked up to $1.17 billion from
$1.14 billion at the end of 2012.
UNUSUAL PENSION DEAL
The sale agreement announced Monday assures that the
businesses being sold will continue to fund pension benefits for
British retirees. The pension trustee indicated in a statement
it intends to own the businesses for an extended period.
"Though it is an unusual transaction, for the pension fund,
it makes sense because the number of pensioners is dwindling and
they still have found a business to invest in," said Conboy.
Kodak launched its first camera in 1888, and grew to
dominate the market for photographic film. Although Kodak
invented the digital camera, it put the project on the back
burner and spent years watching rivals stake claim to the market
while roll-up film sales plummeted. The company filed for
bankruptcy protection last year.
The company's pink sheet shares rose 25 percent on Monday to
37.9 cents. The company has said it does not expect shareholders
to receive anything in the bankruptcy. Most companies that file
for Chapter 11 bankruptcy end up canceling their stock.
Its bankruptcy case is in Re: Eastman Kodak Co. et al, U.S.
Bankruptcy Court, Southern District of New York, No. 12-10202.