Many of the world's biggest names in electronics and technology,
from Canon to LG to Microsoft, are pushing back against the
landmark deal Eastman Kodak Co. (EKDKQ) struck to resolve $2.8
billion in U.K. pension claims.
More than a dozen companies on Thursday filed court papers
outlining their objections and concerns to a deal that Kodak calls
the "centerpiece" of its restructuring: the transfer of its
personalized-imaging and document-imaging businesses to its U.K.
pensioners.
The deal, which covers such Kodak products and services as
cameras, retail photo-printing kiosks and scanners, will not only
resolve the $2.8 billion in U.K. pension claims but will also bring
in $650 million in cash and noncash consideration to Kodak's
bankruptcy estate.
The companies that filed objections say they don't have a
problem with the idea of Kodak selling those businesses to its
retirees, but they do have a problem with how they and the various
agreements they have with Kodak--including patent license
agreements--will fare in the sale.
"In their sale motion...the debtors repeat and expand upon
aggressive strategies that they have employed in prior sale motions
in this case," Nikon Corp. (NINOY, 7731.TO) said in its objection.
"The sale motion, which is ambiguous, overreaching, and lacks
adequate protection for parties-in-interest, misuses the plan and
proposed order to the potential detriment of parties-in-interest,
including Nikon."
Nikon's objection, which many of the other companies joined in,
points out the deal's lack of protection for the companies' rights
as well as the possibility that their agreements could be
transferred to the pension plan without their consent or without
paying off any amounts owed under them.
Among the companies joining in Nikon's concerns are Intel Corp.
(INTC), International Business Machines Corp. (IBM), LG Electronics
Inc. (066570.SE), Microsoft Corp. (MSFT) and Nokia Corp. (NOK).
Other objections came in from Canon Inc. (CAJ, 7751.TO ),
Hewlett-Packard Co. (HPQ), Imax Corp. (IMAX) and Sony Corp. (SNE,
6758.TO).
According to Kodak, however, the deal is "essential" to its
ability to restructure.
"The debtors believe there is no foreseeable alternative to
resolve these liabilities more favorably for the debtors than the
[pension plan] global settlement," the company said in court
papers.
The U.S. Bankruptcy Court in Manhattan will consider the deal,
and the objections to it, at a hearing next Thursday.
Kodak, of Rochester, N.Y., sought Chapter 11 protection in
January 2012. It is hoping to exit bankruptcy later this year under
a restructuring plan that, in addition to incorporating the U.K.
pension deal, would hand control of the company to its
bondholders.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Jacqueline Palank at
jacqueline.palank@dowjones.com.
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