Kodak to End Health-Care, Survivor-Benefits Program

http://online.wsj.com/article/SB10000872396390443749204578048982185090520.html

Eastman Kodak Co. [EKDKQ -13.04%] said it would terminate its health-care and survivor-benefits program, resolving a $1.2 billion retiree-benefits liability. 

Kodak will provide retirees with a $7.5 million cash payment to support initial administration and benefit obligations, a $635 million unsecured claim and a $15 million allowed administrative claim. An earlier version of this article erroneously said the company would provide retirees with $657.7 million.

OPEB coverage currently costs the company about $10 million per month. The company said it has paid 100% of its share of the costs for these benefits, resulting in cash expenditures of more than $90 million, since filing for Chapter 11 protection. 

Kodak said the proposed agreement, which needs to be approved by the bankruptcy court, will result in significant cost savings and liquidity enhancement. 

Kodak filed for Chapter 11 protection in January, blaming an inability to attract buyers for its patents, the burden of retiree benefits, a weak economy and moves by vendors to cut ties to the company. 

The Rochester, N.Y., company has said that, starting next year, it will focus its consumer inkjet business on the sale of ink to its installed base, and wind down sales of consumer inkjet printers.