Georgia Gulf further extends private exchange offers, lowers threshold

By Angela McDaniels

Tacoma, Wash., July 20 - Georgia Gulf Corp. extended the private exchange offers and consent solicitations for three series of its notes to midnight ET on July 23 from July 22 and lowered the minimum tender condition to 94% of the notes from 98%, according to a company news release.

Included in the offer are the company's $500 million of 9½% senior notes due 2014, $200 million of 10¾% senior subordinated notes due 2016 and $100 million of 7 1/8% senior notes due 2013.

The company is offering to exchange all the notes for a total of 32.05 million shares of new convertible preferred stock, which can be converted into common stock on a one-for-one basis, and 1.43 million shares of common stock, after giving effect to a planned one-for-25 reverse stock split.

After the split, Georgia Gulf will have 3 million authorized shares. To allow an increase to 100 million and the issuance of a new equity incentive plan for up to 3,033,000 shares, the company will call a special meeting of stockholders to approve changes to its charter. Once the amendments are approved, the convertible preferreds will automatically convert into common stock.

For each $1,000 principal amount of the senior notes, Georgia Gulf is offering 47.30 shares of convertible preferred stock and 2.11 shares of common stock. For the senior subordinated notes, it is offering 18.36 shares of convertible preferred stock and 0.82 shares of common stock.

As of 5 p.m. ET on July 17, holders had tendered $653.1 million, or 81.6%, of the notes in total, comprised of $60.4 million of the 7 1/8% notes, $434.6 million of the 9½% notes and $158.1 million of the 10¾% notes.

The exchanges are subject to the amendment of Georgia Gulf's credit agreement in addition to the receipt of tenders and consents for at least 94% of the notes.

The offers began March 31 and were originally scheduled to expire April 27. They have been extended several times and were substantially revised on July 2.

Under the new terms, noteholders will receive up to 96% of the company's equity and the board will be reconstituted, with up to four new directors drawn from a list provided by holders of a majority of the 10¾% notes to replace existing directors. The board size will remain at seven.

The revised deal was agreed to with holders of 77% of its outstanding notes, and these investors entered into lock-up agreements requiring them to tender their notes and deliver consents. Covered by the agreements are holders of 84.6% of the 9½% notes, 79.3% of the 10¾% notes and 34.6% of the 7 1/8% notes.

At July 1, under the old terms, holders had tendered $1,265,000 of the 7 1/8% notes, $7.55 million of the 9½% notes and $150,000 of the 10¾% notes.

Under those terms, Georgia Gulf was 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 would have received $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 were subject to the receipt of tenders for at least 95% of the outstanding principal amount of all three issues of old notes.

Forbearance agreements

As previously reported, Georgia Gulf has entered into forbearance agreements with holders of more than 84% of the 9½% notes, 79% of the 10¾% notes and 53% of the 7 1/8% notes.

The agreements ensure that the notes cannot be accelerated prior to the earlier of July 30 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.

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.

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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