Fitch raises Georgia-Pacific

Fitch Ratings said it has raised the senior unsecured long-term debt ratings of Georgia-Pacific to BB+ from BB and changed the outlook to stable.

Fitch said the upgrade is due to expected debt reduction from asset sales proceeds as well as free cash flow generation. Proceeds from the sales of the company's building products distribution business and its non-integrated pulp mills at Brunswick, Ga., and New Augusta, Miss., (totaling nearly $1.4 billion) will be used to reduce debt. In anticipation of the sales, Georgia-Pacific has called $982 million in bonds so far.

Georgia-Pacific has a good chance to repay $1.8 billion or so in debt before the end of 2004, Fitch noted. Credit measures could improve to around 3.0 times debt/EBITDA with about a 100 basis point absolute downside if markets decide to renegotiate tissue and containerboard prices and if wood panel prices retreat.

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