* Investors worried about $160 million credit withdrawal
* One analyst lowers stock price target to $1
* Kodak says committed to meeting obligations
* Bids for patents due in October-source
* Shares close down 27 percent (Rewrites story throughout; adds comments about credit withdrawal, CEO tenure)
By Liana B. Baker
Sept 26 (Reuters) - Eastman Kodak Co EK.N shares fell to a 38-year low after the photography pioneer drew down a credit line by $160 million, raising concerns about cash flow generation and its ability to compete against digital rivals under the strategy set forth by CEO Antonio Perez.
Instead of quelling investor concerns about the unexpected tapping of its credit line, however, Kodak heightened them by declining to comment on its current cash position. Kodak had $957 million in cash on its balance sheet as of June 30.
But Kodak representative Christopher Veronda declined to disclose the amount of cash on hand the company currently has, saying only that "we certainly have not consumed $957 million in cash since June 30."
Veronda also said Kodak keeps most of its cash and revenue outside the United States, but did not elaborate on how that is related to the borrowing announced on Monday.
Investors reacted to Kodak's lack of transparency by sending its shares to their lowest level since 1973, closing trading on Monday down 27 percent, or 64 cents, at $1.74.
By comparison, Kodak stock hovered at around $90 per share in 1997 before it began its steady descent. The company, whose market capitalization now stands at just $468.15 million, has not turned a profit since 2007.
Kodak's borrowing comes as it is engaged in a costly and drawn-out patent battle with deep-pocketed rivals Apple Inc (AAPL.O) and Research in Motion Ltd RIM.TO in front of the International Trade Commission.
Veronda said the company decided to borrow the money "for global cash management reasons" and it was committed to meeting its obligations.
But Scott Dinsdale, a vice president at KDP Asset Management, told Thomson-Reuters IFR that Kodak's borrowing is an attempt to "grab at whatever is available" and could be a signal the company is burning too much cash. He added that Kodak could file for bankruptcy "between now and 2012."
Analyst Shannon Cross of Cross Research cut Kodak's price target to $1 on the "unexpected cash usage." Cross said in a research note that Kodak may have spent as much as $200 million in cash in the third quarter.
The terms of the credit withdrawal call for Kodak to pay an interest rate of 1.5 percent plus a base rate, which would make the current interest rate 4.75 percent, according to Rafferty Capital Market analyst Mark Kaufman.
Kodak has until at least 2016 to pay back the money. In April, the company entered into an agreement for a new credit facility of up to $400 million.
The cost of insuring Kodak debt against default soared on the news Monday. By the end of trading, it cost $5.8 million upfront plus $500,000 a year for five years to protect $10 million of the company's debt against default, up from $4.7 million upfront on Friday.
Perez, Kodak's CEO and board chairman since 2005, spent 25 years at Hewlett-Packard Co (HPQ.N) before joining Kodak. He has spearheaded Kodak's effort to transform itself into a provider of products for digital photography and both commercial and consumer printers.
The company has suspended its dividend and slashed its employee base by more than 70 percent to 18,800 in an effort to implement that plan.
But after four years of losses, analysts are now pressuring him to deliver on his promise to make Kodak profitable.
"Where is the CEO? We've heard nothing from him as the stock continues to plummet," said Gregg Abella, a principal of New Jersey-based Investment Partners Group.
Jerry Mozian, a restructuring expert at Kinetic Advisors, said of Perez: "He's going to be under pressure to produce. He's been in place a while and they have this plan and, hopefully, it can work, but he's got to show it's working."
Kodak dismissed concerns about Perez's performance and said that "Antonio and the management team remain focused on delivering on our strategy toward becoming a profitable, sustainable digital company."
Perez said in late July that Kodak would sell part of its patent portfolio, which is estimated to be worth more than $2 billion in its entirety.
Kodak has not updated the sale process since then, which is another cause of concern for Abella. But, a source close to the sale process said first round bids are due in to Lazard Ltd (LAZ.N) in early to mid-October. (Reporting by Liana B. Baker in New York; editing by Derek Caney, Lisa Von Ahn, Robert MacMillan and Andre Grenon)