Kodak reviewing options with respect to KRIP, including possible termination

In a regulatory filing, Eastman Kodak (KODK) disclosed that on November 20, the Kodak Retirement Income Plan Trust, in its capacity as holder of assets for the benefit of the Kodak Retirement Income Plan, or “KRIP,” entered into a Purchase and Sale Agreement with Mastercard Foundation (MA). Pursuant to the agreement, the Trust agreed to sell and the buyer agreed to purchase certain private equity ownership interests and other illiquid assets held by the Trust for the benefit of KRIP having an aggregate net asset value as of March 31 of $764.4M for a purchase price of $550.6M payable in cash at closing. “Subsequent to the entry into the Agreement, the Trust entered into or expects to enter into in the near term Purchase and Sale Agreements similar to the Agreement with four other investors pursuant to which the Trust agreed or will agree to sell and such investors agreed or will agree to purchase certain KRIP Illiquid Assets having an aggregate net asset value as of the Reference Date of $87.3M for a purchase price of $61.7M payable in cash at closing, except for $15.3M of cash proceeds which are payable on a deferred basis on December 31, 2025. The Sale Agreements were entered into as a result of the previously announced secondary sale process with respect to the KRIP Illiquid Assets being conducted by a third-party broker. Assuming the consummation of the transactions contemplated by the Sale Agreements, the Trust will continue to hold KRIP Illiquid Assets having a net asset value of $161.3M as of September 30, 2024. KRIP also owns interests in hedge funds having a net asset value of $917.2M as of September 30, 2024 which are not included in the KRIP Illiquid Assets. As previously reported, redemption notices have been given with respect to a substantial majority of Hedge Fund Assets and KRIP expects to receive proceeds from the redemption of those Hedge Fund Assets in accordance with the agreements governing the relevant Hedge Fund Assets. The Board of Directors of Eastman Kodak Company, the settlor of KRIP, is reviewing options with respect to KRIP, including the possible termination of KRIP, and has instructed the committee with authority to manage KRIP’s assets to take actions appropriate to position KRIP for a potential termination. At this time, the Board has not yet made a formal determination to terminate KRIP. The following disclosure summarizes what Kodak expects and projects to occur in the event of a termination of KRIP assuming the transactions under the Sale Agreements are consummated as contemplated and the Board determines to terminate KRIP. A termination of KRIP would not impair the accrued benefits of any participant under KRIP; rather, the first step in the termination process would be the satisfaction of KRIP’s liabilities to all participants in a manner complying with applicable laws. It is anticipated that KRIP’s liabilities would be satisfied through a combination of lump sum distributions to active and terminated vested participants who elect a lump sum distribution and the purchase of an annuity from an insurance company with respect to existing KRIP annuity obligations for current retirees and beneficiaries and annuity obligations arising from the termination to active and terminated vested participants who do not elect to receive lump sum distributions. The cost to satisfy KRIP’s liabilities will be affected by a variety of factors including interest rate fluctuations, the portion of active and terminated vested participants who elect lump-sum distributions, the premium payable to purchase the annuity, and other actuarial factors used to calculate the value of KRIP’s ongoing annuity obligations,” the filing noted.