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.