GEO Specialty Chemicals files for Chapter 11

New York, March 18 - GEO Specialty Chemicals, Inc. filed for Chapter 11 protection from its creditors in the U.S. Bankruptcy Court for the District of New Jersey.

The filing follows the company's failure to pay the coupon scheduled for Feb. 1 on its $120 million of 10 1/8% senior subordinated notes due 2008 within the 30-day grace period. That caused a default on the notes and its senior credit facility.

The Harrison, N.J. specialty chemicals manufacturer estimated both its assets and liabilities at more than $100 million in the Chapter 11 filing. It said it has more than 1,000 creditors.

GEO Specialty listed assets of $264.1 million as of Sept. 30, 2003, long-term liabilities of $215.4 million and current liabilities of $36.3 million in its most recent 10-Q filing with the Securities and Exchange Commission.

The largest unsecured creditor is J.P. Morgan Trust Co., NA as trustee for $125 million of unsecured bonds followed by Airlee Opportunity Fund, LP of Greenwich, Conn. with $22 million of unsecured bonds, Merrill Lynch Investment Management, LP of Princeton, N.J. with $21 million of unsecured bonds, Deutsche Banc Asset Management of Philadelphia with $12.544 million of unsecured bonds, White Box Advisors of Minneapolis with $6.551 million of unsecured bonds and Oppenheimer & Co. of New York with $5 million of unsecured bonds.

In addition to the 10 1/8% notes, GEO Specialty had a credit facility with $100.55 million of principal outstanding as of the bankruptcy filing date. Deutsche Bank Trust Co. Americas is administrative agent, Salomon Smith Barney Inc. is syndication agent and U.S. Bank NA is documentation agent.

As of the filing date, the company also owes $6.6 million on $6.1 million principal amount of 15% senior notes issued to Charter Oak Partners and Charter Oak Capital Partners, LP.

DIP for $15 million

GEO Specialty has a commitment letter for a $15 million debtor-in-possession facility with Deutsche Bank Trust Co. Americas. The revolving credit facility will be limited to $10 million until final court approval is obtained. Deutsche Bank Securities Inc. will syndicate the loan.

The facility will mature on Dec. 31, 2004 unless the company emerges from bankruptcy or sells all its assets earlier.

Interest will be at prime plus 250 basis points. There is a 50 basis points unused fee.

GEO Specialty's Chapter 11 case number is 04-19148.

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