Georgia Gulf to Withhold $34 Million of Bond Interest
Georgia Gulf Corp. (GGC), North America’s largest maker of vinyl construction products, will withhold $34 million of interest payments on certain bonds that are the subject of an exchange offer.
Lenders agreed to amend a senior secured credit agreement that allows Georgia Gulf to delay interest payments until May 11, the Atlanta-based company said today in a statement. The payments, due today, are for 2014 senior notes and 2016 senior subordinated notes.
Chief Executive Officer Paul Carrico is trying to reduce borrowings and remain in compliance with debt covenants amid weak demand for vinyl siding, window frames and PVC pipe. The company yesterday extended until April 27 an offer to exchange $800 million of notes for new stock and $250 million of higher- interest debt.
“We are pleased to have the support of our lenders and the flexibility that this amendment provides,” Carrico said in the statement. “We will continue to work closely with all parties that share our desire to achieve a long-term capital structure that supports the needs of the business.”
Georgia Gulf rose 4 cents, or 3.4 percent, to $1.22 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 14 percent this year.
Georgia Gulf has reported net losses in the two years after the 2006 acquisition of Canadian building-products maker Royal Group Technologies Inc. The $1.08 billion purchase increased sales to builders as the U.S. housing market began to weaken. Carrico was appointed CEO in February 2008.
The company suspended its dividend in September and amended its senior secured credit facility on March 17 to avoid breaking terms of the agreement. Georgia Gulf said it had $65 million of cash on hand and $35.8 million of borrowing capacity under its revolving credit facility as of March 31.
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