Rochester, N.Y. - Kodak reached a deal to end some benefits for its retirees.
In an agreement in principal with the Official Committee of Retirees, some benefits will be terminated at the end of the year. In exchange, Kodak will provide cash payments to the retiree group, designed to offset future medical and dental costs.
Under the proposed agreement, Kodak will terminate medical, dental, and life insurances, as well as survivor benefits. In exchange, the retiree group will be given a lump sum payment of $7.5 million, and an unsecured claim of more than $630 million.
George Conboy of Brighton Securities says it is unlikely a bulk of that money will be paid out, which means retirees 65 and older will have to lean on Medicare while those younger than 65 will likely have to shell out hundreds of dollars a month for health insurance.
Joe Janowicz doesn't turn 65 until the middle of next year.
"We’re going to have to rob Peter to pay Paul, perhaps going to dinner less and taking away vacations," Janowicz said.
56,000 retirees, their spouses and dependents currently rely on Kodak medical benefits.
More than 6,000 retirees are under 65.
The proposal will not impact pension benefits.
The agreement would mean significant cost savings to the bankrupt company, if it’s approved by a bankruptcy court.
Kodak says it spends $10 million a month on medical benefits for retirees.
"With this proposed resolution to our U.S. retiree benefit legacy liabilities, Kodak takes a major step forward toward our successful emergence," said Kodak CEO Antonio Perez. "Today's agreement is a decisive accomplishment toward one of our fundamental objectives in our restructuring. At the same time, Kodak continues to make progress in the other important restructuring areas as we prepare Kodak for emergence. We are appreciative of the hard work and engagement of the 1114 Committee that helped us reach this agreement and of the great contributions of our retirees."