S&P; Drops Ratings on Polaroid Debt
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Ratings on about $920 million in Polaroid (PRD) corporate debt were cut by Standard & Poor’s, a week after the company reduced its profit forecast for the second time since September.
The credit-rating agency said it is concerned that the world’s largest instant-photography company will be weakened as sales of its traditional products decline and Polaroid relies more on new products with shorter life cycles.
Polaroid is selling assets to pay off debt while trying to improve profit with new products and services. Margins on film products introduced three decades ago are 65%, though, while margins on new digital cameras and instant cameras aimed at young people range from 15% to 30%, analysts say.
S&P; cut its ratings on the company’s senior unsecured debt to B-plus from BB-minus. Its corporate credit and senior unsecured bank loan were cut to BB-minus from BB.
The credit agency said its rating outlook is negative because of concern about the Cambridge, Mass.-based company’s ability to refinance credit agreements next December and senior unsecured notes in January 2002.
Polaroid shares rose 19 cents to $5.88 Friday. They have fallen 69% this year.
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