Kodak’s Pension Plan Overhaul: A Billion-Dollar Opportunity
Eastman Kodak’s pension plan is undergoing a significant transformation, paving the way for the company to tap into its substantial surplus. The plan’s board has sold a portfolio of illiquid assets to the Mastercard Foundation, valued at $550.6 million, and is considering winding down the rest of the fund.
A Surplus Built Over the Years
The pension plan has accumulated a surplus of roughly $1 billion, thanks to savvy investments in hedge funds and private equity. This surplus is expected to yield $530 million to $585 million in proceeds, exceeding the company’s current market capitalization.
Positioning for a Potential Sale
The plan’s board has instructed its asset management committee to prepare the fund for a potential sale. Although the decision is not yet final, the move signals Kodak’s intention to capitalize on its pension surplus.
A Win-Win for All Parties
The sale of private equity ownership interests and other illiquid assets to the Mastercard Foundation is expected to close by year-end. Kodak shares surged as much as 25% following the announcement, marking the biggest intraday move since February.
Protecting Plan Members
The pension plan, which manages retirement assets for over 37,000 people, has ensured that liabilities to current and future retirees will be covered through a combination of lump-sum distributions and the purchase of an annuity from an insurance company.
A New Chapter for Kodak
In March, Kodak announced it would outsource pension management to an external firm while exploring ways to utilize the surplus. With this latest development, the company is poised to benefit from its years of careful planning and investment.
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