Georgia Gulf Corp. (GGC), North America's largest maker of vinyl construction products, said it may be forced into bankruptcy unless a Delaware judge rules the company isn't in default of $100 million in notes.
The Atlanta-based company sued Sandelman Partners LP on June 8, saying the hedge fund notified it two days earlier that the 7.125 percent notes must be paid within 30 days. Sandelman holds about $44 million of the callable bond issue, due in 2013, according to court papers.
``If Sandelman is permitted to accelerate the notes and to declare the amounts owed thereunder to be immediately due and payable, the company may be forced to declare bankruptcy,'' Georgia Gulf said in its complaint in Delaware Chancery Court in Wilmington.
Georgia Gulf shares fell 25 percent on May 7 amid a widening first-quarter loss attributed to weaker U.S. demand for vinyl siding, window frames and PVC tubing. The company reported a net loss of $266 million last year on sales of $3.16 billion.
Officials of Sandelman, which has offices in New York and London, weren't immediately available to comment on the lawsuit.
Among Georgia Gulf's other debt are $500 million in 9.5 percent notes due in 2014 and $200 million in 10.75 percent notes due in 2016, according to data compiled by Bloomberg News.
Georgia Gulf rose 1 cent to $4.61 in New York Stock Exchange composite trading at 4:04 p.m. The shares have fallen 73 percent in the past year, cutting the company's market value to $158.9 million.
The case is Georgia Gulf Corp. v. Sandelman Partners LP, CA3815, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Phil Milford in Wilmington at email@example.com.