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Polaroid loans extended
August 10, 2001: 2:46 p.m. ET

Instant film maker obtains $10M credit, grants bondholders secured status
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NEW YORK (CNNfn) - Polaroid Corp. Friday got a one-month extension on its loan waivers and an extra $10 million from its creditors, a day after its auditor expressed concern about the instant photography company's ability to survive.

The company also said it granted its bondholders secured creditor status.

Polaroid (PRD: up $0.01 to $1.46, Research, Estimates), which has lagged in the race to exploit new digital film technology, said last month it would suspend $26 million in interest payments to bondholders as it strives to pay off nearly $1 billion in debt.

"This news allows us to continue on a business-as-usual basis as we negotiate with bondholder representatives and bank lenders and explore strategic options for the company's future," CEO Gary DiCamillo said.

The announcement comes a day after the Cambridge, Mass.-based company's auditor, KPMG, questioned its ability to continue as a going concern because of its cash position.

Last month, Polaroid received a last-minute reprieve from creditors as it announced it had hired Dresdner Kleinwort Wasserstein to help it explore strategic alternatives, including an outright sale of the company, in addition to suspending interest payments to long- and short-term bondholders.

Buckman, Buckman & Reid analyst Ulysses Yannas said he was not surprised by the announcement, adding that since the company's employees own 20 percent of the stock, management is working extra hard to rejuvenate the company.

"They're looking to cut their debt down to half. That's the long and the short of it," Yannas said.

Several companies might be interested in buying Polaroid for its new digital printing technology, Opal and Onyx, in which consumers can instantly receive 35mm quality prints from any digital camera for about the same cost as a regular one-hour photo service, industry analysts have said.

Possible buyers include Canon (CAJ: unchanged at $34.80, Research, Estimates), Hewlett-Packard (HWP: up $0.40 to $25.10, Research, Estimates), Fuji Photo Film Co. Ltd. (FUJIY: up $0.14 to $40.52, Research, Estimates), and Schroders PLC (SDR.L: up $35.00 to $873.00, Research, Estimates), which owns film and photo assets, the analysts have said.

A meeting with bondholders is scheduled for later this month.

The company said Friday it had negotiated with an ad hoc committee of bondholders and their and legal financial advisors to pledge two additional properties in Massachusetts as security against bank and bond debt.

The bondholders' committee has retained the law firm of Akin, Gump, Strauss, Hauer & Feld LLP and financial advisor Houlihan, Lokey Howard & Zukin.

Under the agreement announced Friday, Polaroid got an extension to Nov. 15 on its domestic and international loan-covenant waivers, which were due to expire on Oct. 12. graphic


Polaroid mulls options for restructuring plan - July 26, 2001