Polaroid
Bruner: Case Studies in
Finance: Managing for
Corporate Value Creation,
4/e
VI. Management of the
Corporate Capital Structure
31. Polaroid Corporation,
1996
© The McGraw−Hill
Companies, 2003
CASE 31
Polaroid Corporation, 1996
In late March 1996, Ralph Norwood, the recently appointed treasurer of Polaroid Corporation, reflected on several matters of concern about the firm’s debt policy that would require his attention in the coming months. One immediate concern was Polaroid’s outstanding
$150 million, 7.25 percent notes, which were due to mature in January 1997. Investment bankers, keenly interested in garnering advisory and underwriting business from Polaroid, had sought to present proposals for refunding the issue. However, Norwood felt that any refunding decision should be part of a larger review of the firm’s financial policies. Accordingly he undertook a review of the firm’s overall debt policy, focusing primarily on the mix of debt and equity and on the maturity structure of the debt. He also sought to consider issues of control, the establishment of any special advisory relationships, and the use of new financial instruments.
In recent years Polaroid’s share price had traded in a narrow range, reflecting small sales and earnings growth. However, a new plan to exploit aggressively the existing Polaroid brand, introduce product extensions, and enter new emerging markets (such as Russia) had been proposed to spur the firm’s performance. The restructuring plan was spearheaded by Gary T. DiCamillo, the first outsider appointed chief executive officer
(CEO) in the firm’s history. DiCamillo had only recently joined the firm in November 1995.
Norwood believed the plan would reinvigorate the company without materially increasing its operating risk. With important changes in the works, Norwood felt it essential that his financial policies afford Polaroid the necessary funding and flexibility to pursue the initiatives of the new CEO.
Finance: Managing for
Corporate Value Creation,
4/e
VI. Management of the
Corporate Capital Structure
31. Polaroid Corporation,
1996
© The McGraw−Hill
Companies, 2003
CASE 31
Polaroid Corporation, 1996
In late March 1996, Ralph Norwood, the recently appointed treasurer of Polaroid Corporation, reflected on several matters of concern about the firm’s debt policy that would require his attention in the coming months. One immediate concern was Polaroid’s outstanding
$150 million, 7.25 percent notes, which were due to mature in January 1997. Investment bankers, keenly interested in garnering advisory and underwriting business from Polaroid, had sought to present proposals for refunding the issue. However, Norwood felt that any refunding decision should be part of a larger review of the firm’s financial policies. Accordingly he undertook a review of the firm’s overall debt policy, focusing primarily on the mix of debt and equity and on the maturity structure of the debt. He also sought to consider issues of control, the establishment of any special advisory relationships, and the use of new financial instruments.
In recent years Polaroid’s share price had traded in a narrow range, reflecting small sales and earnings growth. However, a new plan to exploit aggressively the existing Polaroid brand, introduce product extensions, and enter new emerging markets (such as Russia) had been proposed to spur the firm’s performance. The restructuring plan was spearheaded by Gary T. DiCamillo, the first outsider appointed chief executive officer
(CEO) in the firm’s history. DiCamillo had only recently joined the firm in November 1995.
Norwood believed the plan would reinvigorate the company without materially increasing its operating risk. With important changes in the works, Norwood felt it essential that his financial policies afford Polaroid the necessary funding and flexibility to pursue the initiatives of the new CEO.