Georgia Gulf reaches forbearance agreements with noteholders, extends exchange offers

By Angela McDaniels

Tacoma, Wash., May 13 - Georgia Gulf Corp. has entered into forbearance agreements with the holders of its $100 million of 7 1/8% senior notes due 2013, $500 million of 9½% senior notes due 2014 and $200 million of 10¾% senior subordinated notes due 2016, according to a company news release.

Under the agreements, the notes cannot be accelerated prior to June 15 in connection with the $34.5 million of interest payments on the 9½% notes and 10¾% notes that were due on April 15 but not paid.

The agreements were entered into with holders of more than 84% of the 9½% notes, 79% of the 10¾% notes and 53% of the 7 1/8% notes.

Once these forbearances expire on June 15, an acceleration under any issue of the notes would constitute a cross default under the company's other note issues and its senior secured credit facility, allowing the holders of that debt to also accelerate.

Georgia Gulf said that if that were to happen, it would have to immediately explore alternatives that could include a potential reorganization or restructuring under the bankruptcy laws.

As previously reported, the company received an amendment from its senior secured lenders that will allow it to continue to withhold the interest payments without causing a default on the bank facility.

Exchange offers

The company also extended the early participation deadline and the expiration date in its private exchange offers for the notes to midnight ET on June 1 from May 14.

The offer began March 31 and was originally scheduled to expire April 27. It has been extended three times.

The early participation deadline was originally expected to be April 14 and has been pushed back four times.

Georgia Gulf is offering $250 million principal amount of 15% senior secured second-lien notes due 2014 and 6,922,255 shares of its common stock in exchange for the notes.

Holders will receive $375 principal amount of new notes for every $1,000 principal amount of the 7 1/8% notes and 9½% notes and $125 principal amount of new notes for each $1,000 principal amount of the 10¾% notes.

The offers are subject to the receipt of tenders for at least 95% of the outstanding principal amount of all three issues of old notes.

As of May 13, holders had tendered $18.8 million of the 7 1/8% notes, $17.9 million of the 9½% notes and $150,000 of the 10¾% notes.

Georgia Gulf said that assuming the minimum tender condition is met and any notes are tendered before the early participation deadline, it plans to issue the entire $250 million principal amount of new notes and 6,922,255 shares even if less than 100% of the outstanding old notes eligible for exchange are tendered.

Any new notes that remain after the tendered old notes are exchanged will be issued on a pro rata basis to those holders who tendered old notes prior to the early participation deadline. Georgia Gulf will issue 6,922,255 shares, which represents 19.99% of its common stock outstanding on March 30, to the early participants on the same pro rata basis.

If 95% of each series of notes were tendered by the early participation deadline and no additional notes were tendered, the company would issue $37.5 million of new notes to the 7 1/8% noteholders, $187.5 million of new notes to the 9½% noteholders and $25 million of new notes to the 10¾% noteholders.

The exchange offers are being made in a private transaction only to holders of old notes in the United States who are "qualified institutional buyers" and holders outside the United States who are persons other than "U.S. persons" as defined under the Securities Act.

Global Bondholder Services Corp. (212 430-3774 or 866 873-7700) is the information agent.

Georgia Gulf is an Atlanta-based maker of chlorovinyls and aromatics chemicals and vinyl-based building and home improvement products

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