Kodak Evaluates Options For U.S. Pension Plan, Including Potential Termination; Stock Surges

Eastman Kodak

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Kaufen / Verkaufen

(RTTNews) - Eastman Kodak Co. (KODK) disclosed in a regulatory filing on Monday that it is evaluating options for its U.S. pension plan, including the potential termination, as part of efforts to release the value of its overfunded pension fund.

Kodak stated that terminating the plan could result in proceeds between $530 million and $585 million. However, the company has yet to make a final decision regarding the termination of the pension plan.

KODK closed Monday's regular trading at $6.25 up $0.98 or 18.60%. In the after-hours trading, the stock further gained $0.19 or 3.04%.

Kodak has agreed to sell certain private equity ownership interests and other illiquid assets held by the Kodak Retirement Income Plan Trust for the benefit of Kodak Retirement Income Plan or KRIP having an aggregate net asset value as of March 31, 2024 of $764.4 million for a purchase price of $550.6 million payable in cash at closing.

The Trust entered into or expects to enter into in the near term Purchase and Sale Agreements similar to the Agreement with four other investors pursuant to which the Trust agreed or will agree to sell and such investors agreed or will agree to purchase certain KRIP Illiquid Assets having an aggregate net asset value as of the Reference Date of $87.3 million for a purchase price of $61.7 million payable in cash at closing, except for $15.3 million of cash proceeds which are payable on a deferred basis on December 31, 2025.

Based on current assumptions, Kodak estimates KRIP would have surplus assets of between $885 million and $975 million after the satisfaction of KRIP's liabilities.

Assuming the consummation of the transactions contemplated by the Sale Agreements, the Trust will continue to hold KRIP Illiquid Assets having a net asset value of $161.3 million as of September 30, 2024. KRIP also owns interests in hedge funds having a net asset value of $917.2 million as of September 30, 2024 which are not included in the KRIP Illiquid Assets.

Kodak expects that it would direct the transfer of or otherwise contribute 25% of the surplus assets, which may include all or a significant portion of remaining non-cash assets to one or more qualified replacement plans for the benefit of current employees. In addition to the proceeds received by Kodak from KRIP, the Replacement Plan is projected to have assets having a value of between $220 million and $245 million which would allow Kodak to provide valuable benefits to its current employee base for the foreseeable future without additional cash cost to Kodak.

Kodak emphasized that the termination of KRIP would not affect the accrued benefits of any participants in the plan.