Photography pioneer Eastman Kodak Co EKDKQ.PK cleared the last two hurdles to ending its bankruptcy in one leap on Monday with an agreement to sell its remaining non-core businesses to its British pension fund for $650 million.
The pension plan also agreed to give up a $2.8 billion claim against Kodak, the largest unsecured claim against the company.
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 enterprise customers.
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.
The settlement assures Kodak's continued operations outside the United States, Chief Executive Antonio Perez said in a statement.
The deal also assures the businesses will continue to fund pension benefits for British retirees and 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. But when digital cameras became more affordable, film sales plummeted. The company filed for bankruptcy protection last year.
Its bankruptcy case is in Re: Eastman Kodak Co. et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.