GEO Specialty misses coupon payment, explores options

By Jeff Pines

Washington, Feb. 2 - GEO Specialty Chemicals, Inc. said it missed its Feb. 2 interest payment on its 10 1/8% senior subordinated notes. The company has $120 million of the notes outstanding.

The Cleveland-based company has 30 days to make the payment to avoid a default.

The company said it would continue to operate with its existing cash resources and cash flow from operations while it negotiates with its equity sources, bank group and other stakeholders and explores its strategic options.

William Eckman, GEO's chief financial officer, said the company is on current terms with its trade creditors and has enough liquidity to pay them in a timely manner.

GEO missed a payment on the notes on Aug. 1. Back then, GEO negotiated with its senior lenders and shareholders to sell them a $6.1 million promissory note. The sale was completed during August and it permitted GEO to make the interest payment and pay default interest due on its notes within the applicable 30-day grace period, according to the company's 10-Q for the third quarter ended Sept. 30.

It then hired CIBC World Markets to help it renegotiate its senior debt.

On March 31, the specialty chemical manufacturer will have to make a $20 million payment on its term B facility.

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