================================================================= POLAROID BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2001 (ISSN XXXX-XXXX) October 15, 2001 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- POLAROID BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, On an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Copying and re-mailing of POLAROID BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO POLAROID BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF POLAROID CORPORATION [00002] POLAROID'S JUNE 30, 2001 CONSOLIDATED BALANCE SHEET [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 PROCEEDINGS [00004] POLAROID CHAPTER 11 DATABASE [00005] LIST OF POLAROID'S 50-LARGEST UNSECURED CREDITORS [00006] DEBTORS' EMERGENCY MOTION TO USE LENDERS' CASH COLLATERAL [00007] DEBTORS' MOTION TO OBTAIN $50,000,000 OF DIP FINANCING KEY DATE CALENDAR ----------------- 10/12/01 Voluntary Petition Date 10/27/01 Deadline for filing Schedules of Assets and Liabilities 10/27/01 Deadline for filing Statement of Financial Affairs 10/27/01 Deadline for filing Lists of Leases and Contracts 11/01/01 Deadline to provide Utilities with adequate assurance 12/11/01 Deadline to make decisions about lease dispositions 01/10/02 Deadline to remove actions pursuant to F.R.B.P. 9027 02/09/02 Expiration of Debtors' Exclusive Plan Proposal Period 04/10/02 Expiration of Debtors' Exclusive Solicitation Period 10/12/02 Expiration of $50,000,000 DIP Financing Facility 10/11/03 Deadline for Debtors' Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO POLAROID BANKRUPTCY NEWS ----------------------------------------------------------------- POLAROID BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving POLAROID BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990. Currently, we provide similar coverage about the chapter 11 cases involving Federal-Mogul, W.R. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- POLAROID BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF POLAROID CORPORATION ----------------------------------------------------------------- POLAROID CORPORATION 784 Memorial Dr. Cambridge, MA 02139 Telephone (781) 386-2000 Fax (781) 386-3924 http://www.polaroid.com Polaroid Corporation (NYSE: PRD) and its affiliates are the leading instant imaging company in the world and the only manufacturer of traditional silver-halide, or chemical-based, instant cameras and film in the United States. Polaroid's principal products are instant film, instant and digital cameras, digital peripherals and secure identification systems with software and system solutions. In addition, the Company designs, develops, manufactures and markets hardware accessories for the instant imaging market, conventional 35mm cameras and film. Polaroid has approximately 8,000 employees throughout its worldwide network of operating facilities. Polaroid is managed in five primary segments: Latest Quarterly Latest Quarterly Contribution to Contribution to Company Sales Company Profits --------------- ---------------- Americas Region -- All countries in North America and $225,000,000 $39,300,000 South America 68% European Region -- all the countries $62,100,000 $2,400,000 in continental Europe, 19% the United Kingdom, Russia, the Middle-East the African continent Asia Pacific Region $46,100,000 $10,100,000 -- includes Japan, 14% Australia and the Asian continent, excluding Russia Global Operations -- worldwide activities $0 ($50,800,000) associated with manufacturing, logistics, procurement, developing manufacturing processes for new products and inventory management. Research and Development $0 ($16,800,000) -- corporate research and engineering activities. Polaroid's products are manufactured for worldwide consumption and are tailored, often through packaging and cosmetic features, for regional customers. The Company's principal products are sold in all regions and represented approximately 90% of Polaroid's net sales for the year ended December 31, 2000. For the fiscal year ended December 31, 2000, the Company reported consolidate revenues of approximately $1,900,000,000 billion. In the first half of 2001, sales decreased by 25% from the first half of 2000. On a unit basis, from the first half of 2000, worldwide shipments to customers fell: 4% for traditional cameras; 20% for traditional film; 30% for newer cameras; and 5% for newer film products. Worldwide digital camera shipments to customers increased approximately 3% in the first half of 2001 compared with the same period in 2000. Polaroid says that it continues to have high expectations for its Opal and Onyx instant digital printing technologies, and will continue to pursue ways to maximize potential partnership opportunities for the IDP business. This deterioration in revenues from the Company's core businesses occurred at a rate greater than management expected. Neal D. oldman, Polaroid's Executive Vice President, Chief Administrative Officer, General Counsel and Secretary says: (A) the general overall economic downturn this year; (B) inventory reductions by the Company's major retail customers; and (C) greater competition from digital cameras; caused this deterioration. "Moreover," Mr. Goldman adds, "although the Company developed promising new technologies, these products have not yet reached the point of generating revenues or cash flow sufficient to offset the declines in their other roducts." In February and June 2001, Polaroid initiated major global restructuring plans designed to reduce debt and return Polaroid to profitability. These plans included a reduction of more than 30% of the Company's global workforce over 18 months. Despite those efforts, the Company's financial position continued to deteriorate. As a result, the Debtors were unable to refinance their principal obligations under their prepetition credit facilities, each scheduled to mature on December 31, 2001, or their 6-3/4% Notes due January 15, 2002. Since February, the Company has actively pursued asset divestitures and alternative transactions. Thus far, those efforts have failed to produce an acceptable transaction or sufficient liquidity. Going forward, Polaroid and its lenders have agreed to accelerate and intensify exploring a sale of all or parts of the Company. In response to the question, "Who would be interested in buying the company," Polaroid says: "We are continuing to explore a range of alternatives, including a possible sale of all or parts of the company to a strategic buyer (such as another manufacturer of cameras or film) or a financial buyer (such as a private equity firm)." ----------------------------------------------------------------- [00002] POLAROID'S JUNE 30, 2001 CONSOLIDATED BALANCE SHEET ----------------------------------------------------------------- POLAROID CORPORATION AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEET At July 1, 2001 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $94.000,000 Receivables 291.600,000 Inventories: Raw materials 89.100,000 Work-in-process 148.800,000 Finished goods 202.500,000 -------------- Total inventories 440.400,000 Prepaid expenses and other current assets 113.500,000 -------------- TOTAL CURRENT ASSETS 939.500,000 PROPERTY, PLANT AND EQUIPMENT: Total property, plant and equipment 1,924.000,000 Less accumulated depreciation 1,413.400,000 -------------- NET PROPERTY, PLANT AND EQUIPMENT 510.600,000 DEFERRED TAX ASSETS 281.800,000 OTHER ASSETS 78.100,000 -------------- TOTAL ASSETS $1,810.000,000 ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $524.500,000 Payables and accruals 259.600,000 Compensation and benefits 96.700,000 Federal, state and foreign income taxes 20.800,000 -------------- TOTAL CURRENT LIABILITIES 901.600,000 LONG-TERM DEBT 423.900,000 ACCRUED POSTRETIREMENT BENEFITS 221.200,000 OTHER LONG-TERM LIABILITIES 87.700,000 COMMON STOCKHOLDERS' EQUITY: Common stock, $1 par value 75.400,000 Additional paid-in capital 296.600,000 Retained earnings 1,018.700,000 Accumulated other comprehensive income (76.600,000) Less: Treasury stock, at cost (1,138.500,000) -------------- TOTAL COMMON STOCKHOLDERS' EQUITY 175.600,000 -------------- TOTAL LIABILITIES AND COMMON STOCKHOLDERS' EQUITY $1,810.000,000 ============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 PROCEEDINGS ----------------------------------------------------------------- Polaroid Files Voluntary Chapter 11 Petition, Receives $50 Million in New Financing -- Non-U.S. Subsidiaries Not Part Of Filing; -- Facilities In U.S. and Abroad Open and Conducting Business -- Accelerates and Intensifies Efforts To Sell Company CAMBRIDGE, Massachusetts -- October 12, 2001 -- Polaroid Corporation (NYSE: PRD) today announced that, following this year's steep decline in its revenues and the resulting impact on its liquidity, the company and its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filings were made in the U.S. Bankruptcy Court in Wilmington, Delaware. Polaroid intends to use the Chapter 11 process to restructure its business operations and finances. Polaroid is open and conducting business in the U.S. and elsewhere around the world. Polaroid's non-U.S. subsidiaries, including those in Europe, Asia and Japan, are not part of the filing. In order to address immediate liquidity concerns created by the dramatic shortfall in revenue, Polaroid has obtained a commitment for $50 million in debtor-in-possession financing from a bank group led by J.P. Morgan Chase & Co. Upon court approval, which is expected shortly, $40 million of these funds will be available immediately on an interim basis to supplement the company's existing cash flow and help Polaroid fulfill obligations associated with operating its business, including payment to suppliers, vendors and other business partners for goods and services provided on or after today's filing. The full $50 million commitment is subject to final court approval and other conditions. Polaroid intends to continue to manufacture, market and distribute its core instant imaging products and to provide customer service and support for these products. Employees are being paid in the usual manner and their medical, dental and life insurance benefits are expected to continue unchanged. Polaroid also announced that the company and its lenders have agreed to accelerate and intensify its exploration of a possible sale of all or parts of the company. Polaroid believes that such a sale would be in the best interests of all constituencies, including employees. As previously announced, Polaroid has retained financial advisors to assist with this process. Additionally, in light of its reduced revenue base and the uncertain economic outlook, the company has initiated a thorough evaluation of all aspects of its business operations with the objective of achieving significant cost savings beyond those already provided by the company's previously announced restructuring activities. This process will result in the disposition or elimination of non-core products and businesses, additional asset sales, facility closings, and a further reduction in personnel. Gary T. DiCamillo, chairman and chief executive officer, said, "After a thorough analysis of Polaroid's financial condition and the rapidly changing outlook in our key markets, the board of directors and senior management concluded that today's court filings by our U.S. operations were both prudent and necessary. Despite our best efforts to stabilize revenue, reduce costs and maximize cash flow, the company's financial condition deteriorated further in recent weeks. "Filing for Chapter 11 at this time allows Polaroid to enhance its liquidity by supplementing cash flow from operations with $50 million in new financing. It also allows us to initiate a formal process in which to intensify our exploration of strategic alternatives and work with our creditors to develop a plan to resolve their financial claims. "From an operational standpoint," DiCamillo continued, "we intend to continue shipments of our core instant imaging products to customers as normal and meet our post-petition obligations to suppliers, vendors and other business partners. We will also continue to pursue opportunities to maximize the potential of our Opal and Onyx instant digital printing technologies." In conjunction with today's court proceedings, Polaroid expects to file a variety of "first day motions" to support its employees, customers and suppliers. These include motions seeking court permission to: continue payments for employee payroll and health benefits; honor existing warranties; obtain interim financing authority and maintain cash management programs; and retain legal, financial, and other professionals to support the company's reorganization. In accordance with applicable law and court orders, suppliers who provided goods or services to Polaroid or its U.S. subsidiaries before today's filing may have pre-petition claims, which will be frozen pending court authorization of payment or consummation of a plan of reorganization. William L. Flaherty, executive vice president and chief financial officer, said, "Polaroid made significant progress over the last year toward reducing costs through restructuring, improving working capital, consolidating manufacturing, reducing capital spending and selling non-core assets. However, it is evident that with the company's substantially reduced revenue stream, additional steps must be taken during the reorganization process to improve the viability of the core instant imaging business, optimize the sale process and maximize the value of the enterprise." Polaroid Corporation is the worldwide leader in instant imaging. Polaroid supplies instant photographic cameras and films; digital imaging hardware, software and media; secure identification systems; and sunglasses to markets worldwide. Additional information about Polaroid's reorganization is available on the company's web site at http://www.Polaroid.com or, in the U.S., by calling its new toll-free information hotline at 1-800-386-0145. ----------------------------------------------------------------- [00004] POLAROID CHAPTER 11 DATABASE ----------------------------------------------------------------- Debtor entities filing separate chapter 11 petitions: Case No. Debtor Entity -------- ------------- 01-10864 Polaroid Corporation 01-10865 Inner City, Inc 01-10866 Polaroid Asia Pacific Limited 01-10867 Polaroid Latin America Corporation 01-10868 Polaroid Digital Solutions, Inc. 01-10869 Polaroid Eyewear, Inc. 01-10870 Polaroid ID Systems, Inc. (fka NBS Imaging Systems 01-10871 Polaroid Malaysia Limited 01-10872 PRD Capital, Inc. 01-10874 PRD Investment, Inc. 01-10875 International Polaroid Corporation 01-10876 Mag-Media Limited 01-10877 PMC, Inc. 01-10878 Polaroid Asia Pacific International, Inc. 01-10879 Polaroid Dry Imaging, LLC 01-10881 Polaroid Eyewear FarEast, Inc. 01-10882 Polaroid Memorial Drive, LLC 01-10883 Sub Debt Partners Corp. 01-10884 Polaroid Online Services, Inc. 01-10885 Polaroid Partners, Inc. 01-10886 Polint, Inc. Petition Date: October 12, 2001 U.S. Bankruptcy Court: United States Bankruptcy Court District of Delaware 824 Market Street, 5th Floor Wilmington, DE 19801 Telephone (302) 252-2900 Judge: The Honorable Peter J. Walsh Debtors' Counsel: David S. Kurtz, Esq. Timothy P. Olson, Esq. Eric W. Kaup, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM 333 West Wacker Drive Chicago, Illinois 60606-1285 Telephone (312) 407-0700 Fax (312) 407-0411 - and - Gregg M. Galardi, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899-0636 Telephone (302) 651-3000 Fax (302) 651-3001 Debtors' Foreign Representatives: Evan D. Flaschen, Esq Anthony J. Smits, Esq. BINGHAM DANA LLP One State Street Hartford, Connecticut 06103-3178 Telephone (860) 240-2700 Fax (860) 240-2800 U.S. Trustee: Patricia A. Staiano United States Trustee for Region 3 844 King Street, Suite 2313 Lockbox 35 Wilmington, Delaware 19801-3519 Telephone (302) 573-6491 Fax (302) 573-6497 ----------------------------------------------------------------- [00005] LIST OF POLAROID'S 50-LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Creditor Nature of Claim Claim Amount -------- --------------- ------------ State Street Bank & Trust Co. Public debt $275,000,000 as Indenture Trustee for 11-1/2% Notes due 2006, issued by Polaroid Corporation Attention John G. Correia Corporate Trust Department 2 Avenue De LaFayette, 6th Floor Boston, MA 02111-1724 Telephone 617-662-1682 Fax 617-662-1465 State Street Bank and Trust Co. Public debt $150,000,000 as Indenture Trustee for 7-1/4% Notes due 2007, issued by Polaroid Corporation Attention John G. Correia Corporate Trust Department 2 Avenue De LaFayette, 6th Floor Boston, MA 02111-1724 Telephone 617-662-1682 Fax 617-662-1465 State Street Bank and Trust Co. Public debt $150,000,000 as Indenture Trustee for 6-3/4% Notes due 2002, issued by Polaroid Corporation Corporate Trust Department Attention John G. Correia 2 Avenue De LaFayette, 6th Floor Boston, MA 02111-1724 Telephone 617-662-1682 Fax 617-662-1465 Enron Energy Services Trade $3,301,946 Attention Paul Williams 1400 Smith Street Houston, TX 77002 Telephone 800-356-9122 Fax 713-853-3129 Tad Resources International Inc Trade $2,356,704 Attention Jamie Parker P.O. Box 360161m Pittsburgh, PA 15250 Telephone 716-546-1660 Fax 716-546-1617 Dupont Teijin Films US LP Trade $2,197,390 Attention Robert Cowley Lancaster Pike & Rte 141 Wilmington, DE 19880-0027 Telephone 302-992-2808 Fax 302-992-6994 Mid-West Automation Systems Inc Trade $2,000,000 Attention Ed Sneddon 1400 Busch Parkway Buffalo Grove, IL 60089-4541 Telephone 847-541-7757 Fax 847-541-7758 ISP Technologies Inc Trade $1,917,151 Attention Stephen R Olsen P. O. Box 65297 Charlotte, NC 28265 Telephone 973-628-3368 Fax 973-628-3594 Supercam Data Inc Trade $1,384,570 Attention WM Choi 9 Hoi Shing Road Tsuen Wan, HONG KONG Telephone 818-735-0677 Fax 011-852-24995450 Leo Burnett Company Inc Trade $1,300,026 Attention Alan Roehl P. O. Box 91451 Chicago, IL 60693 Telephone 312-220-5234 Fax 312-220-3299 Rexam Custom (EDI) Trade $1,089,160 Attention Steve K Polston P. O. Box 75198 Charlotte, NC 28275 Telephone 704-551-1500 Fax 704-551-1572 RJR Packaging Inc Trade $927,037 Attention U. W. (Ric) Engels P. O. Box 75005 Charlotte, NC 28275 Telephone 336-741-2718 Fax 336-741-5440 Rock-Tenn Co Inc Trade $828,479 Attention Scott R. Swan P. O. Box 102064 Atlanta, GA 30368-0001 Telephone 770-448-2193 Fax 770-448-2193 Concord Camera HK Limited Trade $816,255 Attention Ira B. Lampert 98 Texaco Road Tsuen Wan Tsuen Wan, HONG KONG Telephone 954-331-4200 Fax 954-981-3119 Rexam Graphics Trade $785,743 Attention Steve K Polston P. 0. Box 751434 Charlotte, NC 28275 - and - P.O. Box 75198 Charlotte, NC 28275 Telephone 704-551-1500 Fax 704-551-1572 Xirlink Inc Trade $714,465 Attention Matt Brown 2210 Otoole Ave P.O. Box 2210 San Jose, CA 95131 Telephone 401-783-3646 Fax 401-783-3656 Mid-West Trade $673,114 Attention Dave Mancini P. O. Box 60662 Saint Louis, MO 63160 Telephone 781-273-0090 Holland Mark Trade $466,785 Attention Erick Soderstrom 312 Stuart Street Boston, MA 02116 Telephone 617-960-3732 Fax 617-960-3675 Eastman Kodak Co Trade $506,009 Attention Thomas J. Mooney P. O. Box 642166 Pittsburgh, PA 15264 - and - 2400 Mt Read Blvd Rochester, NY 14650-0001 Telephone 716-588-4814 Markson Rosenthal & Co Inc Trade $461,100 Attention Michael Rosenthal P. 0. Box 1959 Passaic, NJ 07056 Telephone 201-569-8811 Fax 201-569-9669 New England Wooden Ware Corp Trade $431,346 Attention Ray Gougen P. O. Box 6101 Worcester, MA 01606 Telephone 508-867-5460 Eastman Chemical Financial Corp Trade $354,875 Attention Jeff Needham P. O. Box 641555 Pittsburgh, PA 15264-1555 Telephone 423-229-6609 Fax 423-226-0247 Office Products N A Trade $346,850 Attention Galen Wong P. O. Box 96672 Chicago, IL 60693 Telephone 714-674-6240 Fax 714-674-6902 Bay State Temp Agency Inc Trade $342,059 Attention M. Kahan P.O. Box 255933 Dorchester, MA 02125 Telephone 617-825-8721 Fax 617-825-8649 Fuji Photo Film Co Ltd Trade $332,252 ttention Hironao Fujii 26 30 Nishiazabu 2 Chome Minato Ku Tokyo 1068620 JAPAN Telephone 011-81-334062445 Fax 011-81-3-3406-2780 Minton Optic Industry Co Ltd Trade $328,680 Attention Jonmy Cheng Grand Central Station P. O. Box 4144 New York, NY 10163 Telephone 011-886-2-82265333 Fax 011-886-2-22272500 McKinsey & Company, Inc. Trade $315,000 Attention John Welsh P. O. Box 7247-7255 Philadelphia, PA 19170-7255 - and - 75 Park Plaza Boston, MA 02116-3934 Telephone 617-753-2031 Fax 617-753-2313 Premier Image Technology Corp Trade $306,650 Attention Jerry Chang 6f No 123 Sec 1 Nei-hu Road Nei Hu Taipei, TAIWAN Telephone 011-886227996110 Fraser Engineering Co Inc Trade $294,594 Attention Lester Fraser 63 Court Street P. O. Box 9142 Newton, MA 02460 Telephone 617-332-3700 Fax 617-332-5706 DVC Group Inc Trade $284,025 Attention Lois Marks 44 Whippany Rd Morristown, NJ 07960 Telephone 973-775-6260 Fax 973-775-6701 Whalley Computer Associates Inc Trade $278,711 Attention Paul Whalley P. O. Box 4950 Springfield, MA 01101 Telephone 413-569-4240 Fax 413-569-4320 Mancini Sheet Metal Inc Trade $263,775 Attention David Mancini 9 Innis Drive P. O. Box 541 Billerica, MA 01821-2604 Telephone 781-273-0090 Fax 978-667-6061 Siemens Business Services Inc Trade $262,129 Attention Patricia Cockey P.O. Box 7777-w501879 Philadelphia, PA 19175 Telephone 781-830-2206 Fax 781-575-8407 SFX Entertainment Trade $250,000 Attention Heather Johnson 220 W 42nd St New York, NY 10022 Telephone 917-421-5663 Fax 917-421-5620 The Rogers Company Trade $242,017 Attention Jeff Blackwell P. O. Box 931759 Cleveland, OH 44193 Telephone 800-544-3880 Fax 440-951-0793 Information Resources Inc Trade $232,537 Attention Scott Butterfield P. O. Box 71156 Chicago, IL 60694-1156 Telephone 718-672-4314 Fax 718-890-6267 Porter/Novelli Inc Trade $228,099 Attention Lisa Rosenberg P.O. Box 19017 Newark, NJ 07195-0017 Telephone 212-601-8050 Fax 212-601-8101 Safety-Kleen (NE) Trade $226,032 Attention Danny Stubbs 221 Sutton St North Andover, MA 01845-1639 Telephone 508-697-4648 Fax 508-279-1452 Rexam Graphics Trade $218,304 Attention Steve K Polston P. O. Box 751434 Charlotte, NC 28275 - and - P.O. Box 75198 Charlotte, NC 28275 Telephone 704-551-1500 Fax 704-551-1572 PPG Industries Inc Trade $215,002 Attention Fred Lint P.O. Box 360175m Pittsburgh, PA 15251 Telephone 610-344-0345 Fax 610-344-7365 Plastics Color & Compounding Inc Trade $215,002 Attention Raymond Lachapelle P.O. Box 8500-50810 Philadelphia, PA 19178-0001 Telephone 732-846-4222 Fax 732-846-9545 Atlantek Inc Trade $214,636 Attention Paul Follett 10 High St Wakefield, RI 02879-3144 Telephone 401-783-5700 X111 Fax 401-783-9881 Sigma Systems Inc Trade $210,532 Attention Tammy Welton 810 Boston Turnpike Shrewsbury, MA 01545 Telephone 508-892-4200 x51 Fax 508-842-1565 Hazardous Abatement Services Trade $208,392 Attention Jim Walters P.O. Box 512 Hull, MA 02045 Telephone 781-925-4882 Fax 781-925-4803 Tocco Trade $208,392 Attention John Tucci 29 Cook Street Billerica, MA 01821 Telephone 978-663-0292 Fax 978-663-9366 Westvaco Corp Trade $206,278 Attention John Mccooney P. O. Box 8500 S4860 Philadelphia, PA 19178-0001 Telephone 413-736-7211 Fax 413-787-9623 - and - Memorial Industrial Park P. 0. Box 1675 Springfield, MA 01101 Telephone 413-787-9611 Fax 413-787-9625 Pretec Electronics Trade $199,400 Attention Gordon Yu 40979 Encyclopedia Circle Fremont, CA 94538 Telephone 510-440-0535 Fax 510-040-0534 Vertalis LLC Trade $198,039 Attention Shiv Verma 24 Peterson Road Natick, MA 01760-1424 Telephone 508-656-6996 Fax 508-650-9720 National Retail Services Trade $197,169 Attention Lawrence Chapman P. 0. Box 5738 Hartford, CT 06102-5738 Telephone 203-790-1644 Fax 203-744-7328 BBI Marketing Services Inc Trade $194,315 Attention Jason Brown P. O. Box 945636 Atlanta, GA 30394 Telephone 925-327-2013 Fax 925-820-1905 Executive Destinations Inc Trade $193,750 Attention Peter Conden 420 Bedford Street Lexington, MA 02420-15228 Telephone 781-860-0878 Fax 781-860-0872 ----------------------------------------------------------------- [00006] DEBTORS' EMERGENCY MOTION TO USE LENDERS' CASH COLLATERAL ----------------------------------------------------------------- At the Petition Date, Polaroid Corporation owes approximately $333,000,000,000 pursuant to the terms of the Amended and Restated Credit Agreement dated as of December 11, 1998, as amended. Morgan Guaranty Trust Company of New York serves as the administrative and collateral agent, and Fleet National Bank (formerly known as BankBoston, N.A.) as Co-Agent for a consortium of lenders comprised (as of August 10, 2001) of ABN AMRO Bank N.V.; Transamerica Business Credit Corporation; Deutsche Bank AG, New York and/or Cayman Islands Branches; Bank One, NA; Senior Debt Portfolio; Sumitomo-Mitsui Banking Corporation; Fleet National Bank; Mellon Bank, N.A.; Textron Financial Corporation; PNC Bank, National Association; Foothill Income Trust, L.P.; Erste Bank New York; General Electric Capital Corporation; Wingate Capital, Ltd.; Barclays Bank PLC; Cerberus Partners, L.P.; Lehman Commercial Paper Inc.; and J.P. Morgan Securities Inc., as agent for The Chase Manhattan Bank. The Debtors' obligations under the Prepetition Credit Agreement are guaranteed by Inner City, Inc.; Polaroid Asia Pacific Limited; Polaroid Digital Solutions, Inc.; Polaroid Eyewear, Inc.; Polaroid ID Systems, Inc.; Polaroid Latin America Corporation; Polaroid Malaysia Limited; and PRD Capital, Inc. Under the Prepetition Credit Agreement, the Prepetition Secured Lenders provided the Debtors with a revolving credit facility and other financial accommodations including. Polaroid Corporation granted a security interest to the Prepetition Secured Lenders in substantially all of Polaroid Corporation's domestic personal property, accounts receivable and real estate now owned or hereafter acquired by the Debtors. All of the Debtors' cash and other proceeds generated from the Prepetition Collateral as of the Petition Date constitutes cash collateral of the Prepetition Secured Lenders within the meaning of 11 U.S.C. Sec. 363(a). The Debtors believe that the Prepetition Secured Lenders currently hold valid, perfected and enforceable first priority liens in substantially all the Debtors' assets. The Debtors need immediate access to the Prepetition Lenders' Cash Collateral in order to fund their payroll. Without the ability to use the Prepetition Lenders' Cash Collateral, Polaroid's chapter 11 restructuring would be over before it begins. By this Emergency Motion, the Debtors sought and obtained Judge Walsh's permission to use up to $13,100,000 of the Prepetition Lenders' Cash Collateral to fund payroll and other critical post- petition obligations to which the Prepetition Lenders give their consent. To the extent that the Debtors use the Prepetition Lenders' Cash Collateral, Judge Walsh directs that the Prepetition Lenders are granted dollar-for-dollar superpriority post-petition priming liens on all of the Debtors' assets. ----------------------------------------------------------------- [00007] DEBTORS' MOTION TO OBTAIN $50,000,000 OF DIP FINANCING ----------------------------------------------------------------- The Debtors need a new source of working capital financing to operate their businesses in chapter 11. Without access to new financing, a successful reorganization will be impossible. Because the Debtors' existing cash on hand may not be sufficient to fund the completion of their restructuring process, the Debtors concluded that obtaining a firm commitment for postpetition financing at the outset of these cases was necessary and in the best interest of their estates. Prior to the Petition Date, Neal D. Goldman, Polaroid's Executive Vice President, Chief Administrative Officer, General Counsel and Secretary tells the Court, the Debtors approached Morgan Guaranty Trust Company of New York, the Prepetition Agent under the Prepetition Credit Agreement, and other financial institutions about providing postpetition debtor-in-possession financing. The Debtors determined that the Postpetition Agent's proposal for the Postpetition Financing was, under the circumstances, the most favorable under the circumstances and addressed the Debtors' working capital needs. Accordingly, in their sound business judgment, David S. Kurtz, Esq., at Skadden, Arps, Slate, Meagher & Flom tells Judge Walsh, the Debtors ultimately decided to accept the Postpetition Agent's proposal for the Postpetition Financing. The DIP Credit Agreement and other documents to be executed in connection therewith, Mr. Kurtz assures the Court, are the result of arm's-length negotiations between the Debtors and the Postpetition Lenders. The salient terms of the Postpetition Financing are: Borrower: Polaroid Corporation Guarantors: All Polaroid debtor-affiliates Lenders: A syndicate of financial institutions, including the Postpetition Agent, to be arranged by J.P. Morgan Securities Inc., currently consisting of: Institution Commitment ----------- ---------- The Chase Manhattan Bank $10,000,000 General Electric Capital Corporation 20,000,000 Fleet National Bank 10,000,000 PNC Bank, N.A. 5,000,000 Wingate Capital, Ltd. 5,000,000 ----------- $50,000,000 Agents: The Chase Manhattan Bank, as Administrative Agent and Collateral Agent; General Electric Capital Corporation, as Documentation Agent; J.P. Morgan Securities, Inc., as Book Manager and Co-Lead Arranger; and GECC Capital Markets Group, Inc., as Co-Lead Arranger Commitment: $50,000,000 with a $5,000,000 sublimit for standby letters of credit Use of Proceeds: For working capital and the Debtors' other general corporate purposes as set forth in a non-public weekly Budget delivered to the Lenders; Availability: The DIP Facility limits aggregate outstanding loans and letters of credit to: Maximum Facility Usage Month During Month End of Month ----- ------------ ------------ October 2001 $45,000,000 $45,000,000 November 2001 45,000,000 35,000,000 December 2001 35,000,000 29,000,000 January 2002 29,000,000 14,000,000 February 2002 17,000,000 17,000,000 March 2002 17,000,000 16,000,000 April 2002 16,000,000 9,000,000 May 2002 9,000,000 5,000,000 June 2002 5,000,000 5,000,000 July 2002 5,000,000 5,000,000 August 2002 5,000,000 5,000,000 September 2002 5,000,000 5,000,000 Maturity Date: October 12, 2002 Priority: Superpriority status under Bankruptcy Code sections 364(c) and (d), subject to the Carve-Out; Liens: The Lenders' claims under the Postpetition Facility are secured, only subject to the Carve-Out: (a) pursuant to 11 U.S.C. Sec. 364(c)(2), by a first priority, perfected lien upon all unencumbered property of the Debtors and on all cash maintained in the Letter of Credit Account; (b) pursuant to 11 U.S.C. Sec. 364(c)(3), by a second priority, junior, perfected lien upon all property of the Debtors (other than property that is subject to the Primed Liens) which is subject to valid and perfected liens in existence as of the Petition Date, or a valid lien perfected (but not granted) subsequent to the Petition Date as permitted by 11 U.S.C. Sec. 546(b); and (c) pursuant to 11 U.S.C. Sec. 364(d)(1), by a first priority, senior, priming, perfected lien upon all property of the Debtors that is subject to the Primed Liens, which first priority, senior, priming, perfected lien shall also prime any liens granted after the Petition Date to provide adequate protection in respect of any of the Primed Liens but shall not prime liens, if any, to which the Primed Liens are subject as of the Petition Date. Carve-Out: The Lenders agree to a $1,000,000 carve-out for payment of unpaid professional fees and disbursements incurred following any Event of Default by professionals retained by the Debtors and any statutory committees appointed in the chapter 11 cases and for payment of U.S. Trustee fees pursuant to 28 U.S.C. Sec. 1930 and to the Clerk of the Bankruptcy Court. Fees: The Debtors agree to pay a variety of Fees: * a $500,000 Advisory and Structuring Fee; * a $750,000 Facility Fee; and * a 0.75% Commitment Fee per annum on every dollar not borrowed from the DIP Lenders. Interest Rate: Prior to February 1, 2002: -- Chase's Alternate Base Rate plus 3.25% or, at the Debtors' option, LIBOR plus 4.25%; On and after February 1, 2002: -- Chase's Alternate Base Rate plus 3.75% or, at the Debtors' option, LIBOR plus 4.75%. In the event of a default, the interest rate increases by 2%. As a condition to the loans, other than the Carve-Out, the Debtors are prohibited from asserting a claim under section 506(c) of the Bankruptcy Code for any costs and expenses incurred in connection with the preservation, protection or enhancement of, or realization by the Postpetition Agent, the Postpetition Lenders, the Prepetition Agent or the Prepetition Secured Lenders upon the Collateral or the Prepetition Collateral. The Debtors advise that they will not seek Court approval of this waiver of 506(c) Causes of Action at the Interim DIP Financing Hearing, but will seek such relief at the Final Hearing. The Lenders give their consent to allow the Creditors' Committee or any other party in interest in these cases (other than the Debtors), to challenge, within 60 days of the formation of such committee, the claims or liens of the Prepetition Agent and the Prepetition Secured Lenders, after which time, if no such challenge is made, the Court's findings in the DIP Financing Orders about the validity, extent, priority and enforceability of the Prepetition Liens shall be binding on all parties in interest. *** End of Issue No. 1 ***