Fitch downgrades Georgia Gulf

Fitch Ratings said it downgraded Georgia Gulf Corp.'s issuer default rating and existing senior unsecured notes to BB- from BB and senior secured credit facility to BB+ from BBB-. The agency also assigned BB- and B ratings to the company's new senior unsecured and senior subordinated notes, respectively.

The ratings were removed from Rating Watch negative, and the outlook is negative.

The downgrade follows the closing of the acquisition of Royal Group Technologies. Fitch said the new issuer default rating incorporates the benefit of greater integration in the vinyls chain, the potential for greater earnings and cash flow with less volatility and some success in realizing cost synergies.

However, the rating is tempered by concerns regarding high leverage, particularly as the PVC resin market is expected to loosen and residential construction activity may be slowing, the agency said. Moreover, target integration risk may be higher due to ongoing legal and regulatory investigations at Royal Group and Georgia Gulf's lack of direct experience integrating a sizeable downstream target.

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