Kodak gets court OK to sell film business

• Kodak filed for bankruptcy protection in early 2012
• More than 3%2C200 employees will become a part of the Kodak Pension Plan based in the United Kingdom
• A hearing Tuesday is on Kodak%27s reorganization plan for when it exits bankruptcy

ROCHESTER, N.Y. -- Eastman Kodak Co. — which made photography cheap, easy and ubiquitous — is now largely out of the photography business.

The Rochester, N.Y.-based printing and imaging company last year quit selling digital cameras. And U.S. Bankruptcy Judge Allan Gropper has approved Kodak selling its camera film business, along with its separate document scanner business, to the pension plan that represents Kodak workers and retirees in the United Kingdom.

The deal wraps up one of the key reasons why Kodak filed for Chapter 11 bankruptcy in early 2012 — all the various costs associated with its legions of retirees — and removes one of the last big hurdles left before the company ends its bankruptcy, most likely by the end of September.

Along with wrapping up the pension plan deal, Kodak announced it had a new, better deal for its post-bankruptcy financing in the form of a series of lenders — JPMorgan Chase & Co., Bank of America. Merrill Lynch, and Barclays — which have jointly pledged to lend as much as $895 million to the company. That money will be used when Kodak gets out of bankruptcy to repay the loans that have kept the company afloat during the bankruptcy process and to provide it with working capital afterward.

The sale of Kodak's Document Imaging and Personal Imaging businesses "is a major breakthrough in our case," Andrew G. Dietderich, an attorney with New York law firm Sullivan Cromwell LLP, said during a U.S. Bankruptcy Court hearing Thursday in New York City.

In the deal, Kodak picks up $650 million and wipes out a $2.8 billion claim by the underfunded pension plan, which represents about 1,000 Kodak workers and close to 14,000 pensioners and other beneficiaries.

The Kodak Pension Plan, in turn, picks up Kodak's document scanner business and its professional and consumer camera film businesses, with hopes of being able to use the profits from those businesses for years to come to pay retirees' benefits. With the businesses, the pension plan will get assets such as Kodak's photo paper plant in England and Kodak facilities in Windsor, Colo. It will lease a substantial part of Eastman Business Park's massive Building 205. It also picks up more than 3,200 full-time permanent Kodak workers — roughly a quarter of Kodak's 13,000 employees worldwide.

"The question we've continued to ask ourselves is, 'Was there a better deal?' We can say definitively, 'No, there was not,' " Dietderich said. "This was not Plan A or Plan B or Plan C. It was probably Plan W. In many ways, necessity is the mother of invention."

The chairman of the pension plan, Steven Ross, was not in court Thursday. But he has previously said Kodak probably would not have sold the businesses had it not needed the money.

In a statement Thursday, CEO Antonio M. Perez said Kodak has "been working in close cooperation (with the pension fund) to achieve a smooth transition for our ... employees and customers to a new owner — one who clearly recognizes the value of these businesses and intends to help them grow and succeed."

The pension fund did not reply this week to questions seeking comment about what kind of plans it has for growing those businesses.

Kodak will continue to manufacture materials used in camera film at Eastman Business Park in Rochester and provide them to the pension plan. Kodak is keeping its entertainment imaging business, which makes film for TV and movie production; all of that film is made at Eastman Business Park. Meanwhile, Kodak-brand digital cameras still exist, as Kodak is licensing its name to a California company, JK Imaging Co., which has since introduced a small line of cameras.

Numerous companies with which Kodak has business arrangements had objected to the sale and wanted Gropper to postpone it. After nearly an hour break in the middle of the hearing, the crowds of lawyers reconvened in Gropper's courtroom to say the various objections had been hammered out with some tweaks to the plan. The sale won't actually happen until Kodak gets court approval on its reorganization plan, which is expected to happen sometime this summer or early fall.

Gropper is expected to hear arguments Tuesday about the information Kodak plans to provide creditors as it asks them to sign off later this year on that reorganization plan. Getting creditors' approval is one of the last major hurdles remaining in Kodak's 17-month old bankruptcy case.

Daneman also writes for the Rochester (N.Y.) Democrat and Chronicle.