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Polaroid Agrees to Unload Most Assets

April 19, 2002|DAVID COLKER | TIMES STAFF WRITER

Polaroid Corp., the landmark company that pioneered instant photography in the pre-digital era, has tentatively agreed to sell most of its assets for $265 million in a bid to recover from bankruptcy.

Polaroid announced Thursday that it had reached an agreement with a group of investors led by One Equity Partners, the private equity arm of Bank One Corp. The price represents less than 15% of the value of Polaroid's assets when the company filed for Chapter 11 protection in October.

The offer, which must be approved by federal regulators and U.S. Bankruptcy Court, could still be matched by other suitors.

Polaroid said the deal would enable the company to launch new products, including kiosk printers that could be used by digital camera owners to make high-quality, 35-millimeter film prints. In the meantime, the company plans to keep making its current products, including the I-Zone, OneStep, JoyCam and Spectra cameras plus the films they use, spokesman Skip Colcord said.

Although the One Equity deal could keep a legendary brand alive, it probably would not provide any "recovery for the company's stockholders," according to a Polaroid news release. Polaroid shares--which traded above $6 in May and $60 in 1997--are now worth less than a dime. The company was delisted from the New York Stock Exchange in October.

"It's a fire sale of the worst sort," said Ulysses Yannas, an analyst for Buckman, Buckman & Reid.

Objections to the deal emerged immediately from a retiree group that has been battling Polaroid management over losing benefits just days before the company's bankruptcy filing. "The offer seems low. I can understand and appreciate no one will pay top dollar for Polaroid at this point," said Al Gray, a lawyer who represents Polaroid retirees. "But it seems extremely low."

A financial analyst who follows Bank One said it would be hard to assess the deal without knowing how Polaroid's debt--nearly $1 billion--would be restructured. But Daniel Hilder of Bear, Stearns & Co. said the company name alone is valuable: "Polaroid is clearly a national brand name and an American icon." Polaroid, which produced its first instant film camera in 1948, was largely left behind as digital cameras that took pictures without film came into vogue in the 1990s.

But company executives maintain that their film technology, protected by more than 800 active patents, is still valuable.

The company's inexpensive I-Zone camera aimed mostly at the teenage market became the best-selling camera in the world shortly after it was introduced in 1999.

"I remember a time when a Polaroid might cost $100 or $200," said Frank Ponder, chief executive of Bel Air Camera Superstore. "Now you can get a Polaroid for $14."

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Associated Press and Reuters were used in compiling this report.

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