Eastman Kodak will be scaling back benefits paid to retirees as part of a
restructuring program aimed at pulling the century-old photography
pioneer out of bankruptcy.
Medical, dental, life insurance and
survivor income benefits, which were costing the company $10 million per
month, will be terminated at the end of the year as part of a proposal
agreed upon with an official committee of retirees.
To cover the
$1.2 billion liability, Kodak will provide the committee with a $7.5
million cash payment, a $635 million unsecured claim and a $15 million
administrative claim, the company said in a statement Wednesday.
Kodak
said it "recognizes this action will pose challenges for retirees. This
agreement is one of the many necessary steps to put the company on a
path to emerge as a profitable, sustainable company."
It added
that the agreement, which is subject to final approval by the bankruptcy
court, "eliminates the need for costly and lengthy litigation."
Kodak, which filed for bankruptcy in January, has said it will have eliminated some 3,900 jobs by the end of the year.
The
company plans to sell off its consumer film business and focus on
digital printing, graphics, entertainment and commercial films.
The
Rochester, New York-based company, started in 1892, led the way in
popularizing cameras, film, slide projectors and home videos.
At
its height in the 1980s, it had 145,000 workers. But years of poor
performance in the age of digital cameras forced it to lay off thousands
and close 13 manufacturing plants and some 130 processing labs since
2003.
The company pioneered research into digital photography
beginning in the mid-1970s. But it was Asian manufacturers that stole a
march in that market in the 1990s as Kodak failed to see the need to
break from its old business lines.