Eastman Kodak has announced a deal to swap its imaging business for a $US2.8 billion debt owed to a pension fund, and will not proceed with a previously announced $US210 million sale of its its document imaging unit to Brother Industries.

The deal must still be approved by a U.S. Bankruptcy Court, however the company believes removing the debt to the pension fund in Britain was the final major hurdle it needed to clear before it could emerge from bankruptcy, reinventing itself as a commercial printing and servicing company.

It would see the pension plan buy Kodak's Document Imaging and Personalized Imaging operations. Kodak will receive $US650 million and the pension plan, in turn, will write off roughly $US2.8 billion in claims it has against Kodak.

Kodak CEO Antonio M. Perez said the sale "moves us past several key hurdles in our reorganisation, resolving all potential claims worldwide ... pacing our Personalized Imaging and Document Imaging businesses with a new owner that recognises their value and is focused on their growth and success, and providing the remaining liquidity we require to emerge from Chapter 11."

Kodak pension fund spokesman John Kiely said the pension fund won't run the businesses directly, but will put together a management team to run them. And in a statement, KPP Chairman Steve Ross said the DI and PI businesses "will deliver long-term cash flows to support the plan's obligations. The financial stability that KPP will provide for the Personalized Imaging and Document Imaging businesses will be beneficial to those businesses' employees, customers and partners."

Kiely said specific plans for the DI and PI businesses — including how to grow them — still have to be worked out. But the U.K. pension plan, having talked with current management and looked at projections, is confident DI and PI can grow, he said. Pension fund managers "obviously gone through an exhaustive due diligence process," Kiely said.

Last year, Kodak sold 1,100 patents to a business group that includes Apple Inc., Google Inc. and Microsoft Corp.

Kodak sold the patent portfolio for $US527 million. But the deal also included the companies agreeing to drop legal challenges against Kodak.