Good news for Kodak (KODK), but much less so for Kodak employees, it seems. The camera giant is looking to terminate its United States pension plan, a move that will unlock huge value from the fund. The gains were substantial enough to catch investor attention, and Kodak shares blasted up over 27% in Monday afternoon’s trading.
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A report from the Wall Street Journal detailed the plan, which noted that Kodak’s pension plan was worth a remarkable amount of money thanks to a combination of excellent market performance and regular substantial contributions from its days as a household name in cameras and film. By shutting down the pension plan, Kodak could unlock about $585 million worth of cash that Kodak could then use to pay down debt and reinvest.
Kodak, for its part, noted that its pension plan is “significantly overfunded,” and the gains would deliver a lot of value. However, in a surprise twist, the employees currently on said pension would not lose out; in fact, the employees would be moved to a new pension plan, though the process may take a year or more to complete. With the pension plan covering around 4,000 employees worldwide—roughly half of them are in the United States—it is clear Kodak will need to do something with them.
Backing a New Play
But Kodak’s recent developments were not just about its pension fund, as a report from WXXI News found. Kodak is looking to 2025 with two things in mind: specialty chemicals and pharmaceuticals. Yes, Kodak has branched out into chemicals of all stripes for 2025 and is currently building out in that direction.
The film and commercial printing markets are still in operation, yes, but with the rise of digital photography in recent years, Kodak has seen less and less return from those businesses. Thus, Kodak is currently working on a new manufacturing facility for the Eastman Business Park. Said facility is set to open in 2025, reports noted, and was said to cost “…in the tens of millions of dollars.”
Is Kodak a Good Stock to Buy?
Turning to Wall Street, no analysts currently hold a position on KODK, so we look instead to the last five days of trading. And, until today’s trading, Kodak was actually down a bit. But the massive ramp-up in trading with today’s news gave Kodak an enormous boost, sending it up 29.32% for the period.
