Georgia Gulf (GGC) in a Deep Hole
Posted Fri Oct 17, 12:27 pm ET
Posted By: Paul Raman, CFA
Georgia Gulf (GGC) is a leading North American manufacturer and marketer of two integrated chemical product lines, chlorovinyls and aromatics. The company is suffering from potentially overpaying for Royal Plastics, a company that makes vinyl-based housing products. The $1.5 billion acquisition resulted in an equal increase in debt. The company recently renegotiated its debt compliance (leverage and interest coverage) ratios, as the company is in danger of non-compliance.
Also, Georgia Gulf saw high production cost due to volatile energy prices. The company was unable to recover costs by increasing prices of its products. Prices for natural gas (the key input) are increasing, which is negating the impact of product price increases. This has compressed margins for the company. Natural gas prices are expected to rise further, stemming from strong US consumption, low inventory, and limited drilling activity.
Georgia Gulf's end markets are primarily housing related. Until housing market conditions improve, it will be difficult for the company to grow profitability and reduce debt.
zacks.com
Jones Day counsel to Georgia Gulf in debt-payments dispute
Posted on June 17, 2008 11:32 by Andy Peters
Georgia Gulf Corp. has sued a New York hedge fund in the Delaware Court of Chancery, asking the court to rule that Georgia Gulf isn’t in default on $100 million in corporate debt.
Georgia Gulf said in court filings it could be forced to file for bankruptcy protection unless the judge rules in its favor. Georgia Gulf filed the suit on June 8 against Sandelman Partners LP of New York, which claimed Georgia Gulf is in default on the payments. Chancery Court Judge Stephen P. Lamb set a trial date of July 21.
Jones Day partners John E. Zamer and Michael J. McConnell and associates Lillian N. Caudle and Walter W. Davis in Atlanta are advising Georgia Gulf. The company is also taking counsel from Potter Anderson & Corroon of Wilmington, Del. Georgia Gulf’s general counsel is Joel Beerman.
Richards Layton & Finger and Bracewell & Giuliani are counsel to Sandelman. Powell Goldstein partner Gregory Worthy in Atlanta is advising U.S. Bank, the trustee for Georgia Gulf’s corporate debt.
Georgia Gulf, of Atlanta, manufactures polyvinyl-chloride products used in the construction, housing and pharmaceutical industries.
dealwatchblog.com
Monday, June 9, 2008
Sandelman alleges Georgia Gulf in default on debt
Atlanta Business Chronicle
An investment firm has alleged Georgia Gulf Corp. has defaulted on debt the company issued in 2003, according to a filing Monday with the Securities and Exchange Commission.
Sandelman Partners LP claims the Atlanta-based building materials and chemicals company (NYSE: GGC) is earning less than double the company's required interest payment amounts, allegedly putting it into default. Georgia Gulf denies the charges and has filed a complaint in Delaware Court of Chancery asking for a declaratory judgment that it is not in default.
Sandelman, which owns $44 million of $100 million in company debt, argues the company's has violated its debt agreement with bondholders of the $100 million in debt due in 2013. As an owner of 25 percent of Georgia Gulf's debt, the investment firm can claim a default and demand full repayment within 30 days. Sandelman sent a notice of default to Georgia Gulf on June 6.
Georgia Gulf in a June 9 SEC filing outlining the dispute said it believes it is not in default. The company, in a June 8 letter to Sandelman, accuses the investment firm of "showing incredible flexibility, and ignoring basic rules of contract construction," and claims the firm made up a non-existent term and ignored contract terms.
Georgia Gulf posted a net loss of $266 million on $3.2 billion in revenue in 2007, and in February named a new CEO and chairman.
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