May 7 - The chair of Kodak's UK Pension Plan has defended criticism of an agreement by the camera firm to sell the fund its remaining non-core businesses. Steven Ross says it was 'by far the best settlement', even though it meant the pension plan agreeing to give up a $2.8 billion claim against Kodak. Edward Baran reports.
As a way to plug a gap in a pension fund, it's pretty innovative. Kodak is selling its remaining non-core businesses for 650 million dollars to its UK pension scheme. In return, they'll drop a 2.8 billion dollar claim against Kodak allowing the US firm to finally exit bankruptcy. But the deal has come under fire. Some pensions experts say the fund should have been allowed to enter the industry-funded Pensions Protection Fund or PPF instead. Steve Ross, chair of the Kodak Pension Plan, rejects that criticism, and says the UK Pensions Regulator which approved the deal was no push over. SOUNDBITE. Steven Ross, Chair UK Kodak Pension Plan, saying: "They gave our advisers a really hard time, as they should, as did we, and I think they know and we know and the PPF know that this was by far the best settlement and it would have been quite illogical to have done anything else." The agreement will see Kodak's UK retirement fund taking control of its consumer and document imaging businesses. SOUNDBITE, Steven Ross, Chair UK Kodak Pension Plan, saying: "Within Kodak there were a number of good businesses - the silverware of Kodak and it needed to sell some of that silverware to get out of Chapter 11. What we'll look to do is to appoint a CEO and then work with that CEO to appoint a board. That board will be an executive board with some non-execs on it to drive the business forward." It was in 1878 that Kodak's founder George Eastman created the first simple camera for consumers. In 1975 a Kodak engineer invented the digital camera But Kodak failed to adapt to the latest developments in digital technology and entered bankruptcy last year. Soon afterwards it announced it would be phasing out making cameras after more than a century. The Kodak case is the latest innovation amongst pension schemes, which are now seeking novel ways to counter large deficits. Hargreaves Lansdown's Tom McPahil says it's the way forward. SOUNDBITE, Tom McPahil, Hargreaves Lansdown, saying (English): " We recently saw Dairy Crest paying a huge quantity of cheese into its pension scheme. A few years ago we had a company paying whisky into its pension scheme. These are one-off deals unique to each individual company but I think it does illustrate that companies and pension schemes need to be pragmatic, need to look at what resources are available to them and find solutions to work for them at an individual level." The deal is still subject to a final rubber stamp from the US bankruptcy courts. But the Kodak pension fund says it doesn't plan to offload the businesses anytime soon