Georgia Gulf Lenders to Wait Longer for Bond Interest
Georgia Gulf Corp. (GGC), North America’s largest maker of vinyl construction products, said lenders agreed to extend forbearance on $34.5 million of interest due on certain bonds that are the subject of an exchange offer.
Interest payments due April 15 will be delayed until June 15, Atlanta-based Georgia Gulf said today in a statement. The delay was agreed to by 84 percent of holders of 9.5 percent notes due in 2014, 79 percent of investors in 10.75 percent bonds due in 2016 and 53 percent of owners of 7.125 percent bonds due in 2013, the company said.
Chief Executive Officer Paul Carrico is trying to reduce borrowings and remain in compliance with debt covenants as the recession cuts demand for vinyl siding, window frames and PVC pipe. The company got lenders to agree to a similar one-month delay in interest payments last month and may need to seek bankruptcy protection if it can’t meet the June 15 deadline.
Georgia Gulf also extended until June 1 an offering to exchange the three bonds, worth $800 million, for 6.92 million shares of stock and $250 million of 15 percent notes. About $36.9 million of notes have been tendered so far, the company said.
Georgia Gulf fell 20 cents, or 17 percent, to $1 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 6.5 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.
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