Georgia Gulf Corp (GGC) to Sell $500 Million Senior Notes

Georgia Gulf Corp (GGC) announced that it intends to sell $500 million of senior secured notes due 2016:

The Company intends to use the net proceeds from the offering of Notes, (i) to repay its existing senior secured credit facilities, (ii) to repay its existing accounts receivable securitization and (iii) to pay certain related transaction costs and expenses. The consummation of the offering of Notes will be conditioned upon the Company concurrently entering into a new senior secured asset based revolving credit facility, as well as other customary conditions.

The senior secured facilities have a balance of $320 million and I think the AR securitization is $97 million.

My involvement with GGC now is primarily as a bondholder. I consider this transaction neutral to positive: the amount of secured debt above me is not going up that much, and the maturities are being extended.

I think they should raise equity if they can at current prices. Selling $100 million stock and tendering for all the little bits of old notes plus putting cash in the bank would be a smooth move.