AP:
Polaroid to Explore Merger, Sale
BOSTON (AP) - Polaroid Corp. (NYSE:PRD - news) said Wednesday it would
explore a merger or sale and said it received a reprieve from lenders, as the the camera
and film maker tries to dig out from beneath a mountain of debt.
The company announced a waiver, good through Oct. 12, on a $363 million line of credit
that was set to expire Thursday, but said it would miss payments to bond holders next
month. It now faces negotiations with bondholders to restructure that debt.
The company also has retained advisers to explore several options for the future of the
company, including "a sale of assets, a merger or sale of the company, and/or a strategic
partnership," said Polaroid spokesman Skip Colcord.
Pending the announcement, Polaroid shares were suspended near the end of trading
Wednesday after falling 30 percent to $1.92 on the New York Stock Exchange (news -
web sites) amid reports it was considering filing for bankruptcy.
The company must now negotiate with bondholders, who after 30 days could use the
missed payments to force Polaroid into involuntary bankruptcy, said Buckman, Buckman
& Reid analyst Ulysses Yannas.
"At this stage Polaroid has no intention of either declaring bankruptcy or going into a
prepackaged bankruptcy," he said. "At least that's what the statement implies. It's a
question of how successful they can be renegotiating these notes."
Polaroid said it would miss an $11 million interest payment due Monday and $16 million
due August 15, as well as a $19 million principal payment due in September.
The company said it had retained Dresdner Kleinwort Wasserstein and Zolfo Cooper
LLC to help it negotiate with bondholders. It has retained that firm and Merrill Lynch &
Co to explore "strategic alternatives."
"The receipt of these waivers demonstrates both the company's continuing support from
its bank group and the progress we are making in implementing our previously announced
five-point plan to strengthen our financial position," said chairman and chief executive
Gary T. DiCamillo in a statement.
Yannas said it was little surprise that the company would consider a sale.
"When you are examining alternatives, you look at every alternative possible," he said.
Previously, some analysts had indicated a waiver was likely because lenders had nothing
to gain if Polaroid filed for protection. They said one clue was that lenders, who have tight
controls over Polaroid's purse strings, have allowed the company to spend $120 million
on severance packages related to recent layoffs. The banks couldn't recoup that money if
the company declared bankruptcy.
Polaroid, founded in 1937, made its name producing instant cameras and film, but it was
caught flat-footed by the recent shift to digital technology.
In May, Polaroid debuted a line of Opal and Onyx digital printers, and unveiled a plan to
share the technology with other companies and build kiosks in high-traffic areas like
shopping malls.
But while the technology impressed analysts, some said it came too late to make a dent in
Polaroid's debts, which totaled $860 million last month. The company laid off 950
workers in February and another 2,000 last month.
Kevin Kuzio, a debt analyst at KDP Investment Advisors Inc. in Montpelier, Vt., said
before the announcement that even with a waiver, Polaroid still faces a serious crisis.
"We don't think it's any longer a situation where Polaroid is independently going to be
able to finesse the transition to a provider of digital photo printing," he said.
Polaroid to Explore Merger, Sale
BOSTON (AP) - Polaroid Corp. (NYSE:PRD - news) said Wednesday it would
explore a merger or sale and said it received a reprieve from lenders, as the the camera
and film maker tries to dig out from beneath a mountain of debt.
The company announced a waiver, good through Oct. 12, on a $363 million line of credit
that was set to expire Thursday, but said it would miss payments to bond holders next
month. It now faces negotiations with bondholders to restructure that debt.
The company also has retained advisers to explore several options for the future of the
company, including "a sale of assets, a merger or sale of the company, and/or a strategic
partnership," said Polaroid spokesman Skip Colcord.
Pending the announcement, Polaroid shares were suspended near the end of trading
Wednesday after falling 30 percent to $1.92 on the New York Stock Exchange (news -
web sites) amid reports it was considering filing for bankruptcy.
The company must now negotiate with bondholders, who after 30 days could use the
missed payments to force Polaroid into involuntary bankruptcy, said Buckman, Buckman
& Reid analyst Ulysses Yannas.
"At this stage Polaroid has no intention of either declaring bankruptcy or going into a
prepackaged bankruptcy," he said. "At least that's what the statement implies. It's a
question of how successful they can be renegotiating these notes."
Polaroid said it would miss an $11 million interest payment due Monday and $16 million
due August 15, as well as a $19 million principal payment due in September.
The company said it had retained Dresdner Kleinwort Wasserstein and Zolfo Cooper
LLC to help it negotiate with bondholders. It has retained that firm and Merrill Lynch &
Co to explore "strategic alternatives."
"The receipt of these waivers demonstrates both the company's continuing support from
its bank group and the progress we are making in implementing our previously announced
five-point plan to strengthen our financial position," said chairman and chief executive
Gary T. DiCamillo in a statement.
Yannas said it was little surprise that the company would consider a sale.
"When you are examining alternatives, you look at every alternative possible," he said.
Previously, some analysts had indicated a waiver was likely because lenders had nothing
to gain if Polaroid filed for protection. They said one clue was that lenders, who have tight
controls over Polaroid's purse strings, have allowed the company to spend $120 million
on severance packages related to recent layoffs. The banks couldn't recoup that money if
the company declared bankruptcy.
Polaroid, founded in 1937, made its name producing instant cameras and film, but it was
caught flat-footed by the recent shift to digital technology.
In May, Polaroid debuted a line of Opal and Onyx digital printers, and unveiled a plan to
share the technology with other companies and build kiosks in high-traffic areas like
shopping malls.
But while the technology impressed analysts, some said it came too late to make a dent in
Polaroid's debts, which totaled $860 million last month. The company laid off 950
workers in February and another 2,000 last month.
Kevin Kuzio, a debt analyst at KDP Investment Advisors Inc. in Montpelier, Vt., said
before the announcement that even with a waiver, Polaroid still faces a serious crisis.
"We don't think it's any longer a situation where Polaroid is independently going to be
able to finesse the transition to a provider of digital photo printing," he said.
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