Kodak to Sell Health Group to Onex for up to $2.55 billion

Kodak to Sell Health Group to Onex for up to $2.55 billion

Eastman Kodak Company (NYSE:EK) announced today that it has entered into an agreement to sell its Health Group to Onex Healthcare Holdings, Inc., a subsidiary of Onex Corporation (TSX: OCX), in a move that will sharpen Kodak’s strategic focus on consumer and professional imaging and the graphic communications industry. Under terms of the agreement, Kodak will sell its Health Group to Onex for up to $2.55 billion. The price is composed of $2.35 billion in cash at closing, plus up to $200 million in additional future payments if Onex achieves certain returns with respect to its investment. If Onex Healthcare investors realize an internal rate of return in excess of 25% on their investment, Kodak will receive payment equal to 25% of the excess return, up to $200 million.

Because of tax-loss carry forwards, Kodak expects to retain the vast majority of the initial $2.35 billion cash proceeds. The company plans to use the proceeds to fully repay its approximately $1.15 billion of secured term debt. Other potential uses of the cash proceeds are under review and will be discussed at Kodak’s previously announced investor meeting, scheduled for February 8.

About 8,100 employees associated with the Health Group will continue with the business following the closing. Included in the sale are manufacturing operations focused on the production of health imaging products, as well as an office building in Rochester, N.Y. Kodak’s Health Group, with revenue of $2.54 billion for the latest 12 reported months (through September 30, 2006), is a worldwide leader in information technology, molecular imaging systems, medical and dental imaging, including digital x-ray capture, medical printers, and x-ray film.

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