Debt threatens US Georgia Gulf - analyst

06 August 2008 23:33  [Source: ICIS news]

HOUSTON (ICIS news)--US polyvinyl chloride (PVC) producer Georgia Gulf will likely need to restructure or amend its debt to remain a going concern, an analyst said on Wednesday.

The company barely managed to meet its covenants during the second quarter, said PJ Juvekar, an analyst with Citigroup. Moreover, Georgia Gulf's debt covenants will steadily tighten through 2010.

Georgia Gulf has struggled as the US housing market remained in a multi-year slump. House construction is a major end market for PVC.

Moreover, Georgia Gulf also makes building products, which increases its exposure to the construction market.

Georgia Gulf does not expect any significant recovery in the US housing market during the next six to 12 months, said Paul Carrico, CEO. Carrico made his comments during a second-quarter earnings call.

At the same time, Georgia's Gulf's pricing has not kept up with rising feedstock costs, said Gregory Thompson, chief financial officer.

As such, the company is expecting a year-over-year decline of up to 15% in earnings before interest, taxes, depreciation and amortisation (EBITDA).

Shares of Georgia Gulf closed on the New York Stock Exchange at $3.35 (€2.18), down1.47%.

($1 = €0.65)

For more on PVC visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Al Greenwood
+1 713 525 2645

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly