Georgia Gulf again extends exchange offers for 7 1/8%, 9½%, 10¾% notes

By Angela McDaniels

Tacoma, Wash., July 1 - Georgia Gulf Corp. said it extended the early participation deadline and the expiration date in its private exchange offers for three series of notes to midnight ET on July 15 from July 1.

The company 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 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.

Georgia Gulf cannot issue the 15% notes without further bank approval due to an amendment made to its senior secured credit agreement, according to a company news release.

The offers began March 31 and were originally scheduled to expire April 27. They have been extended several times.

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As of June 30, holders had tendered and not withdrawn $1,265,000 of the 7 1/8% notes, $7.27 million of the 9½% notes and $150,000 of the 10¾% notes.

In comparison, holders had tendered and not withdrawn $14.3 million of the 7 1/8% notes, $14.6 million of the 9½% notes and $150,000 of the 10¾% notes as of June 12.

Georgia Gulf said that assuming the minimum tender condition is met, 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. Georgia Gulf will issue 6,922,255 shares, which represents 19.99% of its common stock outstanding on March 30, to the participants on the same pro rata basis.

Forbearance agreements

As reported on June 15, the company extended its forbearance agreements with the holders of the notes.

Under the original agreements, the notes could not 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 extended agreements ensure that the notes cannot be accelerated prior to the earlier of July 15 and the first day on which a) holders of at least 25% of any of the three series of notes have the right to accelerate those notes or b) the requisite lenders under the company's senior secured credit agreement have the right to accelerate the debt under the credit facility.

The extended 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.

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.

The company previously received an amendment from its senior secured lenders that will allow it to continue to withhold the interest payments on the 9½% notes and 10¾% notes without causing a default on the bank facility.

Georgia Gulf later received an additional amendment from the senior secured lenders that allows it to withhold interest payments on the 7 1/8% notes.

As a result, the company withheld the $3.6 million of interest that was due June 15 on the 7 1/8% notes. There is a 30-day grace period before the noteholders can seek remedies.

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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