Per SEC Filing, Kodak Preparing to Terminate Pension Plan

Eastman Kodak is reevaluating its retirement plan, considering options to potentially terminate it by selling off illiquid assets, as indicated in a recent filing with the Securities and Exchange Commission on November 25. The Kodak Retirement Income Plan is in the process of finalizing an agreement with the Mastercard Foundation to sell $764.4 million in illiquid assets for $550.6 million by December 31. Additionally, four other investors have agreed to purchase $87.3 million in illiquid assets for $61.7 million, potentially leaving Kodak with $161.3 million in illiquid assets by the end of September 30.

Accessing surplus assets from the pension plan could bring in an estimated $530 million to $585 million, a significant boost for Kodak’s financial position. The company’s market cap is currently at $538 million, and news of the potential pension plan changes caused shares to rise more than 27% in trading.

In the event of plan termination, Kodak plans to satisfy liabilities to plan participants through lump sum distributions and annuities purchased from insurance companies. The company anticipates having surplus assets between $885 million and $975 million after fulfilling obligations and legal requirements. To minimize tax implications, Kodak intends to contribute a portion of the surplus assets to replacement plans for current employees.

If the termination process moves forward and meets all necessary approvals, it may take between 12 to 18 months to resolve liabilities and up to 24 months to receive proceeds from the termination. This shift comes after Kodak outsourced management of its pension plan to NEPC earlier this year, following the closure of its internal investment office. As of December 31, 2022, the plan had assets of $3.7 billion and liabilities of $2.5 billion, resulting in a 148% funding surplus.

Overall, these changes signal Kodak’s strategic efforts to streamline operations, reduce debt, and focus on long-term financial sustainability amidst shifting market conditions.