Polaroid Corp. has reached an agreement with its 14-member bank group to amend the terms of a $350 million credit line led last year by J.P. Morgan & Co.
The amendments extend the maturity by one year, to 2001, and set an interest rate of the London interbank offered rate plus 250 basis points, the company said Wednesday. The original loan closed in March 1997.
Morgan bankers declined to comment.
Hal Diamond, a bank loan analyst with Standard & Poor's, said the key change is that funds drawn from the credit line will be secured by Polaroid's U.S. inventory and receivables.
"That's what I was looking for," Mr. Diamond said.
The credit line had been unsecured, he said.
Though Polaroid's corporate credit rating is BBB-minus, the lowest investment grade rating, its credit line is priced at "highly leveraged" levels, according to loan industry standards. A new credit report on the loan is expected by early next week, Mr. Diamond said.
Gary T. DiCamillo, Polaroid's chief executive, said in a statement that the amendments give Polaroid a "solid footing" in the company's effort to perform profitably in 1999.
"I am particularly pleased that all of the members of our bank group agreed to remain lenders to Polaroid and support our strategic plan," Mr. DiCamillo said.
Cambridge, Mass.-based Polaroid said it has been hard hit by attempts to cut dealer inventories, a loss of Russian business, and increased manufacturing costs.
The company said Wednesday it expects to take $50 million in restructuring charges and $40 million in charges to dispose of its Russian inventories in the fourth quarter.
Polaroid said it would take reserves to offset the charges.
Third-quarter revenues at the photography-products maker fell 13% from a year ago.
The company reported $2.1 billion of assets and $1.08 billion in liabilities at the end of June.
