Kodak Pension Fund to seek bailout

Neil Kelly · Sep 19, 2018

https://www.ft.com/content/9033effe-bb25-11e8-94b2-17176fbf93f5

Kodak Pension Fund 2 (which contains Kodak's pension liabilities for UK employees) stated yesterday that they are likely to seek rescue from the UK Pension Protection Fund, which is effectively an industry funded, government backed bailout scheme. This is due to the £1.5 billion deficit which the scheme currently has and which is unlikely to be made up by other means. There will be cuts to the benefits paid out, but I wonder what will happen to Kodak Alaris and still film? The business (among others) was supposed to help fill the pension gap and is apparently profitable, but the PPF is unlikely to wish to retain the assets - they run funds not companies.

Would Eastman Kodak stand any chance of buying the assets back, or who would be likely to buy it?

Interested to hear any thoughts

faberryman · Sep 19, 2018

Neil Kelly said:
https://www.ft.com/content/9033effe-bb25-11e8-94b2-17176fbf93f5

Kodak Pension Fund 2 (which contains Kodak's pension liabilities for UK employees) stated yesterday that they are likely to seek rescue from the UK Pension Protection Fund, which is effectively an industry funded, government backed bailout scheme. This is due to the £1.5 billion deficit which the scheme currently has and which is unlikely to be made up by other means. There will be cuts to the benefits paid out, but I wonder what will happen to Kodak Alaris and still film? The business (among others) was supposed to help fill the pension gap and is apparently profitable, but the PPF is unlikely to wish to retain the assets - they run funds not companies.

Would Eastman Kodak stand any chance of buying the assets back, or who would be likely to buy it?

Interested to hear any thoughts

I do not think Kodak has the cash for a buyback. They have to buy back something like 450M in preferred stock next year and do not have the cash for that either.

Alan Johnson · Sep 20, 2018

"The PPF [ UK Govt lifeboat the Pension Protection Fund ]is now facing its biggest single claim to date" says veteran member of Parliament Frank Field in a letter to the UK Pensions Regulator.
( City AM London)

TonyB65 · Sep 20, 2018

Most companies have big holes in their pension funds, we've just had our pensions restructured for the second time, it never gets better, and I work for a FTSE 100 company which is relatively healthy. This is just the tip of the iceberg for many private sector employees. It's about time the public sector pensions were tackled, which the rest of us have to pay for.

cmacd123 · Sep 20, 2018

TonyB65 said:
It's about time the public sector pensions were tackled, which the rest of us have to pay for.

or better, that the private sector be held accountable to fully fund their promises to their staff. often public pensions are designed as a model to be held up as best practice to the private sector.

Wallendo · Sep 20, 2018

Neil Kelly said:
https://www.ft.com/content/9033effe-bb25-11e8-94b2-17176fbf93f5

Kodak Pension Fund 2 (which contains Kodak's pension liabilities for UK employees) stated yesterday that they are likely to seek rescue from the UK Pension Protection Fund, which is effectively an industry funded, government backed bailout scheme. This is due to the £1.5 billion deficit which the scheme currently has and which is unlikely to be made up by other means. There will be cuts to the benefits paid out, but I wonder what will happen to Kodak Alaris and still film? The business (among others) was supposed to help fill the pension gap and is apparently profitable, but the PPF is unlikely to wish to retain the assets - they run funds not companies.

Would Eastman Kodak stand any chance of buying the assets back, or who would be likely to buy it?

Interested to hear any thoughts

Obviously EK doesn't have the money. I wonder what the market capitalization of Kodak Alaris would be if it were taken public. The ideal situation would be for EK's film divisions and KA's film distribution division to be bought out by a white knight and reunited. Maybe we can convince Elon Musk that he needs to take Kodak film on his flight around the moon.

mshchem · Sep 20, 2018

The same thing will happen to Social Security, government pension funds. We live on non-stop emission of trillions in debt. Kodak would be a good project for Bezos and Spielberg. Bailout the whole mess for less than a weeks earnings.

TonyB65 · Sep 20, 2018

cmacd123 said:
or better, that the private sector be held accountable to fully fund their promises to their staff. often public pensions are designed as a model to be held up as best practice to the private sector.

On the first point I agree, on the second point, it's easy to be held up as "best practice" when someone else is paying for it.

AgX · Sep 20, 2018

Neil Kelly said:
Kodak Pension Fund 2 (which contains Kodak's pension liabilities for UK employees) stated yesterday that they are likely to seek rescue from the UK Pension Protection Fund, which is effectively an industry funded, government backed bailout scheme. This is due to the £1.5 billion deficit which the scheme currently has and which is unlikely to be made up by other means.

The Kodak Pension Fund cannot have a 1.5 billion deficit.

Alan Johnson · Sep 20, 2018

More details here:
https://www.ftadviser.com/pensions/2018/09/18/kodak-pension-scheme-likely-to-go-to-pension-lifeboat/

pentaxuser · Sep 20, 2018

AgX said:
The Kodak Pension Fund cannot have a 1.5 billion deficit.

I think it may be helpful if you can explain your statement for the sake of keeping this thread from rapidly being relegated to the Soapbox.

What this thread has raised in my mind was how much was the film sales transfer to KA valued at, in terms of Kodak being able to meet its pension obligations and by whom.

pentaxuser

AgX · Sep 20, 2018

AgX said:
The Kodak Pension Fund cannot have a 1.5 billion deficit.

Well, when the Kodak UK pension fund was contemplating to take over parts of Kodak's businesses (what later evolved into Kopdak Alaris) the fund got assets (thus positives) of 900millionPounds.
The same time they had claims against Kodak of 3billion$.

They paid Kodak 325milion$, got those businesses and cancelled any claims against Kodak. Expecting profits of 110million$/year.

Though even if Kodak Alaris made no profit at all, they woukd not be in that stated deficit. So there must be losses for the fund elsewhere.

Could someone get the figures right??

pentaxuser · Sep 20, 2018

Thanks for the informative reply,AgX. So could anyone get the figures right as you have asked? We certainly need to stay grounded on what may be a complicated issue

pentaxuser

MattKing · Sep 20, 2018

I believe that the sum paid by the pension trustees to the Eastman Kodak bankruptcy trustees was $600 million US, not $325 million US.
And I believed that they borrowed all or part of that sum.
The "film" sale transfer was probably valued at a fairly low value. The colour paper transfer, and the land and buildings at Harrow (since sold) as well as the other realty (most likely leasehold) interests were most likely valued at a much higher amount.
So we have a situation where the pension shortfall (not deficit) was 3 billion pounds at the time of the bankruptcy (using AgX's numbers) and has been reduced to 1.5 billion pounds since, but the projected profits from Kodak Alaris are not sufficiently high to continue with the current process.

Alan Johnson · Sep 20, 2018

Anyhow, at present it appears that Kodak Alaris is likely to keep going.
Of rather more doubt is the future of the production facility Building 38 which is I believe operated by US Kodak but that has been discussed in other threads.

AgX · Sep 21, 2018

What I wanted to say was, that one likely may think that the pension fund bought/traded-in a lemon and thus is in big trouble.
But the situation seems more complicated. We do not know the financial situation of that fund before Kodak's insolvency or its onset and we neither do know what that rather big claim the fund had against Kodak at that moment was based on.

On a sale of Kodak Alaris one only can speculate. In any case their halide business would only be an add-on, it not even shows up in their self description

Alan Johnson · Jul 5, 2019

The UK pension fund lifeboat will be I believe now the owner of Kodak Alaris after bailing out the pension fund with GBP 600 million.
https://www.telegraph.co.uk/business/2019/07/04/kodak-bailout-puts-600m-hole-pension-lifeboat/

AgX · Jul 5, 2019

That article is restricted.

Here is a free, interesting article:

https://www.ipe.com/countries/uk/pp...rplus-hit-by-kodak-claim/10032122.fullarticle

cmacd123 · Jul 5, 2019

Pension funds often have investments in working companies as a way to generate income as it is needed to pay out pensions. They do tend to prefer assets like Office Buildings which have a predictable payout over a 20-40 year time frame.

Alan Edward Klein · Jul 5, 2019

Kodak, the parent organization, just filed for bankruptcy again. How will that effect Alaris?

MattKing · Jul 5, 2019

Alan Edward Klein said:
Kodak, the parent organization, just filed for bankruptcy again. How will that effect Alaris?

Where do you see that - it certainly doesn't show up in my Google searches.
If what you refer to is Eastman Kodak, it hasn't been the "parent organization" since the previous bankruptcy in 2011.
Eastman Kodak are the manufacturer that Kodak Alaris buys their film from though.

Alan Edward Klein · Jul 5, 2019

I saw a link to a BBC article in Google - a headline about another Kodak bankruptcy. But there's no article when I clicked on it on the BBC web page. It might have been the Alaris situation that confused BBC. Sorry about that. Carry on.

Alan Edward Klein · Jul 5, 2019

I did find this article from yesterday. It doesn;t look good. I was wondering what would happen to Alaris and Kodak furnished Alaris film if Kodak went out of business? They make the film for Alaris I believe.
https://seekingalpha.com/article/4273495-fight-survive-mode-kodak-zombie-stock

mshchem · Jul 6, 2019

Oh boy, I am not wanting to hear bad things about Kodak, the real Kodak that makes film. Alaris is scary too, what if a foreign company (more foreign than the UK ) bought the rights to Kodak film. We could end up with Vladimir Putin making Lomography purple passion film and calling it Ektachrome.

MattKing · Jul 6, 2019

Well...
As long as Eastman Kodak is still alive, their side of the contract with Kodak Alaris would restrict what anyone who purchased Kodak Alaris could do with the rights to market Kodak film.
And if in a bankruptcy the Eastman Kodak film businesses were sold, the Kodak Alaris contract would quite possibly be of advantage to the purchaser, so that too might protect the still film business.

Kodak Pension Fund to seek bailout

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