<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration No. 33-63051
$100,000,000
GEORGIA GULF CORPORATION
7 5/8% NOTES DUE NOVEMBER 15, 2005
------------------------
Interest on the Notes is payable on May 15 and November 15 of each year,
commencing May 15, 1996. The Notes are not redeemable prior to maturity. The
Notes will be represented by one or more global Notes and registered in the name
of the nominee of The Depository Trust Company. Beneficial interests in the
global Notes will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Except as described
herein, Notes in definitive form will not be issued. The Notes will be issued
only in registered form in denominations of $1,000 and integral multiples
thereof. The Notes will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity for the Notes will therefore
settle in immediately available funds. All payments of principal and interest
will be made by the Company in immediately available funds. See "Description of
Notes -- Same-Day Settlement and Payment".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Note................................ 99.735% 1.000% 98.735%
Total................................... $99,735,000 $1,000,000 $98,735,000
</TABLE>
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(1) Plus accrued interest from November 15, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $260,000 payable by the Company.
------------------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be ready for delivery in book-entry form only through the facilities of DTC
in New York, New York, on or about November 21, 1995, against payment therefor
in immediately available funds.
GOLDMAN, SACHS & CO. CHASE SECURITIES, INC.
------------------------
The date of this Prospectus is November 16, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
AVAILABLE INFORMATION
Georgia Gulf Corporation, a Delaware corporation (the "Company"), is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the
Commission's regional offices at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material may be obtained from the Public
Reference Section of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
listed on the New York Stock Exchange, Inc. Such reports, proxy statements and
other information may also be inspected at the office of such exchange, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") of which this Prospectus forms a part, with
respect to the Notes being offered hereby pursuant to the Securities Act of
1933, as amended (the "Securities Act"). As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. Such
additional information can be inspected at the principal office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of the
Registration Statement can be obtained from the Commission at prescribed rates
by writing to the Commission at such address.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 and the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995 filed by the Company with
the Commission are incorporated by reference in this Prospectus. All documents
subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the termination of the offering of the Notes
hereunder shall be deemed to be incorporated herein by reference and shall be a
part hereof from the date of the filing of such documents. Any statements
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of the documents incorporated by reference
herein, other than exhibits to such documents not specifically incorporated by
reference. Such requests should be directed to: Georgia Gulf Corporation, 400
Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346, Attention: John F.
Walker (telephone number (770) 395-4587).
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THE COMPANY
Georgia Gulf Corporation ("Georgia Gulf" or the "Company") is a leading
manufacturer and marketer of quality chemical and plastic products. The
Company's products are manufactured through two highly integrated lines
categorized into electrochemicals and aromatic chemicals; and also a third
product line, methanol, a natural gas chemical. The Company's electrochemical
products include chlorine, caustic soda, sodium chlorate, vinyl chloride monomer
("VCM"), vinyl resins and compounds; the Company's aromatic chemical products
include cumene, phenol and acetone.
The Company's chemical products are generally intermediate chemicals that
are sold for further processing and use in a wide variety of applications. Some
of the more significant end-use applications include plastic piping, siding and
window frames made from vinyl resins; bonding agents for wood products and
ingredients in high quality plastics made from phenol; acrylic sheeting for
automotive and architectural products made from acetone; and MTBE, a gasoline
additive made from methanol. The Company estimates that the following
percentages of 1994 sales were made to manufacturers in the industries listed:
33% housing and construction, 26% plastics and fibers, 15% consumer products,
17% solvents and chemicals, 4% pulp and paper and 5% miscellaneous.
In the commodity chemicals industry, a company's cost position as well as
the balance of supply and demand in particular product lines significantly
affect earnings and cash flow results. Management believes that Georgia Gulf is
among the lowest cost producers in each of its product lines. In addition, the
Company has invested over $400 million in the past five years to maintain and
improve the efficiency of and expand its operating facilities. Management
believes that with the Company's low cost position and integrated product lines,
it is well positioned to compete in its various markets.
The Company's long-term strategy is to concentrate its efforts on products
and services in the chemical and plastic industries. These efforts include the
continuing investment in maintaining and improving the Company's low cost
position, as well as selective and prudent capacity additions or expansions that
could promote growth in present and closely related product lines.
The principal executive offices of the Company are located at 400 Perimeter
Center Terrace, Suite 595, Atlanta, Georgia 30346. The telephone number of the
Company at such address is (770) 395-4500.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to reduce
indebtedness under the Company's existing revolving credit facility. The Company
used availability under such facility to redeem, at par, the entire outstanding
principal amount of the Company's 15% Senior Subordinated Notes in April 1995.
The Company's existing revolving credit facility matures March 30, 2000 and
bears interest at fluctuating rates that resulted in an average interest rate of
6.28% for the first nine months of 1995.
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SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected historical financial information for each of the
five years in the period ended December 31, 1994 set forth below have been
derived from the consolidated financial statements of the Company audited by
Arthur Andersen LLP, independent public accountants. The historical financial
information for the nine months ended September 30, 1994 and 1995 is derived
from the unaudited financial statements of the Company and, in the opinion of
the Company, includes all adjustments, consisting only of normal recurring
accruals, considered necessary for a fair presentation of such information. The
information for the fiscal year ended December 31, 1990 reflects a
recapitalization transaction of the Company effected April 27, 1990. The results
of operations for interim periods are not necessarily indicative of the results
to be expected for the full year. The information below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" which follows and the Company's consolidated
financial statements and related notes incorporated herein by reference.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- -------------------
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................ $ 932,104 $ 838,336 $ 779,455 $ 768,902 $955,305 $650,138 $860,736
Cost of sales........................ 661,448 626,672 616,802 619,540 677,919 486,262 552,116
Selling and administrative
expenses........................... 42,087 41,129 33,827 38,901 47,164 34,798 35,327
--------- --------- --------- --------- -------- -------- --------
Operating income..................... 228,569 170,535 128,826 110,461 230,222 129,078 273,293
Recapitalization expense............. (17,869) -- -- -- -- -- --
Interest expense..................... (63,161) (80,772) (61,216) (44,779) (37,557) (28,663) (20,795)
Interest income...................... 2,505 492 73 106 113 80 230
--------- --------- --------- --------- -------- -------- --------
Income before income taxes,
extraordinary charge and cumulative
effect of accounting change........ 150,044 90,255 67,683 65,788 192,778 100,495 252,728
Provision for income taxes........... 54,700 28,782 21,346 23,560 70,618 35,983 97,296
--------- --------- --------- --------- -------- -------- --------
Income before extraordinary charge
and cumulative effect of accounting
change............................. 95,344 61,473 46,337 42,228 122,160 64,512 155,432
Extraordinary charge on early
retirement of debt (net of tax
benefit of $6,834)................. -- -- -- (13,267) -- -- --
Cumulative effect of accounting
change for income taxes............ -- -- -- 12,973 -- -- --
--------- --------- --------- --------- -------- -------- --------
Net income........................... $ 95,344 $ 61,473 $ 46,337 $ 41,934 $122,160 $ 64,512 $155,432
========= ========= ========= ========= ======== ======== ========
BALANCE SHEET DATA (PERIOD END):
Working capital...................... $ 50,131 $ 20,676 $ 57,465 $ 67,674 $126,668 $100,859 $ 75,761
Property, plant and equipment, net... 220,851 226,746 217,781 222,835 255,608 250,173 286,859
Total assets......................... 456,657 415,585 419,420 405,287 508,447 467,629 486,213
Total debt........................... 726,481 639,153 444,416 379,206 314,081 346,681 275,700
Stockholders' equity (deficit)....... (424,476) (357,512) (161,165) (110,577) 31,138 (32,311) 45,323
OTHER DATA:
Depreciation and amortization........ $ 19,834 $ 26,447 $ 29,583 $ 27,062 $ 27,774 20,778 23,921
Capital expenditures................. 58,111 28,273 14,261 29,583 59,142 46,842 52,377
Maintenance expenditures............. 42,985 42,853 47,664 43,141 46,033 39,325 41,181
EBITDA(1)............................ 248,403 196,982 158,409 137,523 257,996 149,856 297,214
Ratio of EBITDA to interest
expense(1)......................... 3.9x 2.4x 2.6x 3.1x 6.9x 5.2x 14.3x
Ratio of total debt to EBITDA(1)..... 2.9x 3.2x 2.8x 2.8x 1.2x N/A N/A
Ratio of earnings to fixed
charges(2)......................... 3.2x 2.1x 2.0x 2.3x 5.4x 4.0x 11.0x
</TABLE>
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(1) EBITDA represents operating income plus depreciation and amortization. The
Company has included EBITDA data (which is not a measure of financial
performance under generally accepted accounting principles) because it
understands such data is used by certain investors as a measure of a
Company's ability to service debt.
(2) The ratio of earnings to fixed charges is calculated by dividing the sum of
earnings before fixed charges (net of capitalized interest) and income
taxes by fixed charges, which consist of interest expense (including
capitalized interest), amortization of debt issuance costs and the interest
portion of operating rental expense.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results
of operations should be read in conjunction with the Company's consolidated
financial statements and related notes incorporated herein by reference.
RESULTS OF OPERATIONS
Georgia Gulf's financial performance for 1994 and the first nine months of
1995 dramatically exceeded the results reported for 1993 as the Company
benefitted from the turnaround of several key domestic and international
markets. This turnaround was particularly evident in the rebounding pulp and
paper, automotive and construction markets where demand for the Company's
products resulted in increased sales and margins. Additionally, the expansion of
the gasoline-additive market, in response to Clean Air Act mandates, spurred the
demand for methanol, which significantly elevated profits for 1994 and the first
six months of 1995 before returning to historical levels.
Georgia Gulf operated its facilities at a historically high rate of 97
percent of stated capacity to meet the increased demand for its products during
1994. The operating rate for the first nine months of 1995 was 93 percent.
Efficiencies achieved from these higher production rates, coupled with higher
sales prices, boosted the return on sales to 18.1 percent for the first nine
months of 1995 and 12.8 percent for 1994 from 5.5 percent in 1993. The improved
earnings also enabled the Company to return to positive stockholders' equity at
the end of 1994, eliminating the deficit resulting from the recapitalization of
the Company in 1990.
NINE MONTHS OF 1995 COMPARED WITH NINE MONTHS OF 1994:
For the nine months ended September 30, 1995, net income per common share
was $3.90 on net income of $155.4 million and net sales of $860.7 million. This
compares to net income per common share of $1.52, net income of $64.5 million
and net sales of $650.1 million for the same period in 1994.
Operating income for the nine months ended September 30, 1995, was $273.3
million, an increase of 112 percent from $129.1 million for the same period in
1994. For this period comparison, overall sales volumes improved 3 percent,
while the average sales price of the Company's products rose 29 percent. Both of
these factors helped to offset rising raw material costs, which occurred during
the first half of 1995.
Net interest expense declined $8.0 million when comparing the first nine
months of 1995 to the same period in 1994. This decline was attributable to a
lower debt balance during 1995 and reduced interest rates in connection with the
redemption of the Company's 15% Senior Subordinated Notes (the "Senior
Subordinated Notes") early in the second quarter of 1995.
The effective income tax rate for the nine months ended September 30, 1995,
was 38.5 percent, up from 35.8 percent for the same period in 1994 as a result
of higher taxable income, which minimized the effect of permanent tax
differences.
1994 COMPARED WITH 1993
Net income increased 191 percent in 1994 to $122.2 million, or $2.88 per
share, compared to net income of $41.9 million, or $1.01 per share for 1993. Net
sales increased 24 percent to $955.3 million from $768.9 million in 1993. Sales
volumes rose 3 percent, surpassing the previous sales volume record set in 1993.
Additionally, sales prices were up for nearly all products, with the most
significant increases coming from methanol and vinyl resins, followed by caustic
soda. International sales increased 19 percent over 1993; however, these sales
declined as a percentage of total sales to 13 percent in 1994 from 14 percent in
1993 as a result of stronger growth in domestic sales.
Operating income was $230.2 million in 1994, an increase of 108 percent
over 1993 operating income of $110.5 million. Although the strongest earnings
contributions came from methanol and caustic
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soda, substantially all products showed improved results as increases in sales
prices outpaced higher raw material costs. Selling and administrative expenses
increased to $47.2 million for 1994 from $38.9 million in 1993, primarily as a
result of higher compensation expense related to profit sharing programs and
stock option plans.
Interest expense continued to decline from prior years to $37.6 million in
1994, a 16 percent decrease from $44.8 million in 1993. The Company's weighted
average interest rate increased slightly due to the rising interest rate
environment. However, significant reductions in debt over the past couple of
years, including a $65.1 million reduction in 1994, enabled the Company to
achieve sizable interest savings.
The effective income tax rate was 36.6 percent for 1994 as compared to 35.8
percent for 1993. The 1993 rate included an adjustment of 1.2 percent to revalue
deferred income tax balances for the increase in the federal statutory rate
during 1993. Excluding the impact of this 1993 adjustment, the tax rate for 1994
increased two percentage points as a result of higher taxable income, which
minimized the effect of permanent tax differences.
Results for 1993 reflect an extraordinary charge of $13.3 million relating
to an early debt retirement, which was offset by a $13.0 million benefit from a
change in method of accounting for income taxes.
1993 COMPARED WITH 1992
Net income of $41.9 million in 1993 declined 10 percent from $46.3 million
in 1992. Net sales decreased slightly to $768.9 million in 1993 from $779.5
million in 1992 despite over-all record sales volume in 1993. The decrease in
net sales resulted primarily from a significant decline in the selling price of
caustic soda throughout the year, which more than offset sales price increases
for other products.
Operating income of $110.5 million in 1993 reflects a decrease of $18.4
million from the amount reported in 1992. This decrease was primarily
attributable to the declining selling price for caustic soda. Raw material costs
were down slightly for 1993; however, overall cost of sales increased $2.7
million as a result of the higher sales volumes. Selling and administrative
expenses increased to $38.9 million in 1993 from $33.8 million in 1992. This
increase was largely attributable to a bad debt write-off of $1.9 million and to
the fact that in 1992, selling and administrative expenses were reduced by
approximately $1.0 million due to non-recurring insurance claim settlements
received during that year.
Interest expense in 1993 was $44.8 million as compared with $61.2 million
in 1992. This 27 percent decline was the result of lower interest rates achieved
from a first quarter 1993 debt refinancing and a further $65.2 million reduction
in debt during the year. As a result of the debt refinancing, the Company
incurred an extraordinary charge of $13.3 million, net of an income tax benefit
of $6.8 million.
The fiscal 1993 results were also affected by the Company's adoption
effective January 1, 1993, of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"), which changed the method of
accounting for income taxes from the deferred method to the liability method.
The adoption of SFAS 109 resulted in a cumulative one-time benefit of $13.0
million.
The effective federal and state income tax rate was 35.8 percent in 1993,
as compared to 31.5 percent in 1992. The higher effective rate for 1993 was
primarily attributable to the increase in the federal income tax rate of 1.0
percent and the resulting one-time charge of $800,000 to revalue deferred income
tax balances.
Net income per common share decreased to $1.01 per share in 1993 from $1.18
per share in 1992. The earnings per share calculations were impacted by lower
net income and the greater number of shares outstanding, which resulted after
the May 1992 common stock offering of 6.1 million shares.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1995, $236.1 million of cash was
generated by operating activities as compared to $73.6 million for the nine
months ended September 30, 1994. Cash
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flow increased due to higher net income in 1995, along with a decrease in
working capital. The majority of the decrease in working capital in 1995 was
attributable to a $50.0 million sale of trade receivables under the revolving
trade receivables sales program.
Debt decreased by $38.4 million during the nine months ended September 30
1995, to a level of $275.7 million, which consisted of revolving credit loans of
$167.7 million, a term loan of $100.0 million and other debt of $8.0 million. On
April 15, 1995, the Company used availability under its revolving credit
facility to redeem, at par, the entire outstanding $191.1 million principal
amount of the Senior Subordinated Notes, which would have been due April 2000.
On June 29, 1995, the Company entered into a $100.0 million seven-year term loan
agreement accompanied by interest rate swap agreements, which fix the interest
rate on the term loan between 6.71 and 7.04 percent. Terms and conditions of the
term loan are similar to the current revolving credit facility.
Capital expenditures for the nine months ended September 30, 1995, were
$52.4 million as compared to $46.8 million for the same 1994 period. Previously
announced expansions to the Company's cumene, phenol/acetone, vinyl chloride
monomer and vinyl compound plants are on schedule for completion in 1996.
The Company repurchased approximately 4.4 million shares of common stock
during the first nine months of 1995 at a cost of $135.6 million. The Company is
authorized to retire an additional 3.6 million shares of common stock under its
stock repurchase program.
The Company declared an $0.08 per share dividend for each of the first,
second and third quarters of 1995, which totalled $9.3 million.
Management believes that cash provided by operations and the availability
of cash under the Company's current debt agreements will provide sufficient
funds to support planned capital expenditures, dividends, stock repurchases,
working capital fluctuations and debt service requirements.
OUTLOOK
For the remainder of 1995, early indications point to continued softening
in the demand for certain products, which would lead to a modest reduction in
earnings. While anticipating lower fourth quarter earnings, management is
encouraged by the recent pick-up in certain housing and automotive sectors of
the economy, which will hopefully strengthen demand for several key products.
INFLATION
The most significant components of the Company's cost of sales are raw
materials and energy, which consist of basic commodity items. The cost of raw
materials and energy is based primarily on market forces and has not been
significantly affected by inflation. Also, inflation has not had a material
impact on the Company's sales or income from operations.
ENVIRONMENTAL
The Company's operations are subject to various federal, state and local
laws and regulations relating to environmental quality. These regulations, which
are enforced principally by the United States Environmental Protection Agency
and comparable state agencies, govern the management of solid and hazardous
waste; emissions into the air and underground waters; and the manufacture of
chemical substances. All of the plants operated by the Company meet current
environmental standards.
Management believes that the Company is in material compliance with all
current environmental laws and regulations. The Company estimates that any
expenses incurred in maintaining compliance with these requirements will not
materially affect earnings or cause the Company to exceed its level of
anticipated capital expenditures. However, there can be no assurance that
regulatory requirements will not change, and it is not possible to accurately
predict the aggregate cost of compliance resulting from any such changes.
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DESCRIPTION OF BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Georgia Gulf Corporation ("Georgia Gulf" or the "Company") is a leading
manufacturer and marketer of quality chemical and plastic products. The
Company's products are manufactured through two highly integrated lines
categorized into electrochemicals and aromatic chemicals; and also a third
product line, methanol, a natural gas chemical. The Company's electrochemical
products include chlorine, caustic soda, sodium chlorate, vinyl chloride monomer
("VCM"), vinyl resins and compounds; the Company's aromatic chemical products
include cumene, phenol and acetone.
The Company has operated as an independent corporation since its
acquisition on December 31, 1984, of a major portion of the business and assets
of the chemical division of Georgia-Pacific Corporation ("Georgia-Pacific"). The
Company's operations include production units at five locations, several
marketing organizations responsible for the sale of the Company's products, a
research and development laboratory and a purchasing organization responsible
for the acquisition of all major raw materials. In most product areas, the
Company's marketing program is supported by an ongoing technical service effort.
At the Company's five manufacturing locations, it has twelve plants, six of
which are located at Plaquemine, Louisiana. The Company also leases storage
terminals and warehouses from which a portion of its products are distributed to
customers.
The Company's chemical products are generally intermediate chemicals that
are sold for further processing and use in a wide variety of applications. Some
of the more significant end-use applications include plastic piping, siding and
window frames made from vinyl resins; bonding agents for wood products and
ingredients in high quality plastics made from phenol; acrylic sheeting for
automotive and architectural products made from acetone; and MTBE, a gasoline
additive made from methanol. The Company estimates that the following
percentages of 1994 sales were made to manufacturers in the industries listed:
33% housing and construction, 26% plastics and fibers, 15% consumer products,
17% solvents and chemicals, 4% pulp and paper and 5% miscellaneous.
In the commodity chemicals industry, a company's cost position as well as
the balance of supply and demand in particular product lines significantly
affect earnings and cash flow results. Management believes that Georgia Gulf is
among the lowest cost producers in each of its product lines. In addition, the
Company has invested over $400 million in the past five years to maintain and
improve the efficiency of and expand its operating facilities. Management
believes that with the Company's low cost position and integrated product lines,
it is well positioned to compete in its various markets.
The Company's long-term strategy is to continue to concentrate its efforts
on products and services in the chemical and plastic industries. These efforts
include the continuing investment in maintaining and improving the Company's low
cost position, as well as selective and prudent capacity additions or expansions
that could promote growth in present and closely related product lines.
ELECTROCHEMICAL PRODUCTS
Chlorine/Caustic Soda/Sodium Chlorate. The Company's facility at
Plaquemine, Louisiana, has the annual capacity to produce 452 thousand tons of
chlorine, 501 thousand tons of caustic soda and 27 thousand tons of sodium
chlorate.
The major raw materials for such products are salt and electric power. The
Company has a long-term lease on a salt dome near Plaquemine, Louisiana, with
sufficient reserves of salt to last nearly 50 years at current rates of
production. The lease grants the Company the exclusive use of the salt dome for
the production of salt brine.
Electric power is the most significant cost component in the production of
chlorine, caustic soda and sodium chlorate. The Company's electrical
requirements are currently supplied by Louisiana Power and Light Company
("LP&L") at rates which recognize the lower cost of supplying a very large, high
load-factor customer. The agreement with LP&L is terminable by the Company upon
six months notice, but is
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<PAGE> 9
not terminable by LP&L prior to September 1998. In October 1995, the Company
announced that a 250 megawatt co-generation facility will be constructed at the
Plaquemine, Louisiana, complex which will supply, under a long-term lease
agreement, essentially all electricity and steam requirements for six of the
Company's manufacturing plants. Completion of the co-generation facility is
scheduled for the third quarter of 1997. The Company believes the co-generation
facility will significantly reduce electrical costs as well as limit exposure to
potential problems arising from rapidly changing regulatory and rate
environments.
Chlorine is used in the production of various chemicals, including those
used to make plastics and vinyl resins. Other applications include drinking
water purification and wastewater disinfection, pulp and paper bleaching,
agricultural products, laundry aids and pharmaceuticals.
Chlorine is used by the Company in the production of VCM, which is then
used to produce vinyl resins. The amount of chlorine consumed in the production
of VCM represents a majority of the Company's chlorine production. The Company
sells the remaining chlorine principally to the pulp and paper and chemical
industries.
The major uses of caustic soda are in the production of pulp and paper,
aluminum, oil, soaps and detergents. Caustic soda also has significant
applications in the production of other chemicals and chemical processes where
caustic is used to control pH levels aiding in waste neutralization. Another use
is in the textile industry where it makes fabrics more absorbent and improves
the strength of dyes. Caustic soda is also used, to a lesser extent, in food
processing and electroplating.
Sodium chlorate has major applications in the bleaching process for pulp
and paper. Sodium chlorate is also an ingredient in blasting agents, explosives
and solid rocket fuels.
Vinyl Chloride Monomer. The Company produces VCM at its Plaquemine,
Louisiana, complex as the feedstock for the production of vinyl resins. The
major raw materials used in VCM production are purchased ethylene and
Company-produced chlorine. The VCM plant's annual capacity is 1.26 billion
pounds. A majority of the VCM production is used by the Company's vinyl resins
operations with the remainder being sold to other vinyl resins producers.
Vinyl Suspension Resins. The Company operates a vinyl suspension resins
plant at Plaquemine, Louisiana. The plant is located adjacent to its major raw
material supplier, the Company's VCM facility, thereby minimizing transportation
and handling costs. The annual production capacity is 1.12 billion pounds, of
which approximately one-fourth is used internally in vinyl rigid compounds.
Vinyl suspension resins are one of the most widely used plastics in the
world today. After being formulated to desired properties, vinyl resins are
heated and shaped into finished products by various extrusion, calendaring and
molding processes. Applications are diverse and include pipe, window frames,
siding, flooring, shower curtains, packaging, bottles, film, medical tubing and
business machine housings. These vinyl resins are also important to the
automotive industry for use in seats, trim, floormats and vinyl tops.
Vinyl Emulsion Resins. The Company's Delaware City, Delaware, facility
produces special purpose vinyl emulsion resins with an annual capacity of 48
million pounds. Vinyl emulsion resins, once compounded, are generally
semi-liquid and are processed with heat. Typical applications include filter
gaskets, battery separators, caulking compounds, sealants, surgical gloves,
bottle cap liners and squeeze toys.
Vinyl Rigid Compounds. The Company's vinyl compounding plants, which have
an aggregate of 290 million pounds of annual capacity, are located in
Tiptonville, Tennessee; Gallman, Mississippi; and Delaware City, Delaware. Vinyl
compounds are formulated to provide specific end-use properties that allow the
material to be thermoformed directly into a finished product. All sales of vinyl
compounds are to
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outside customers. The product line can be segregated into three major product
areas according to the following fabrication methods:
Blow Molding -- The Company is a supplier of blow molding compounds,
which are primarily used for both food-grade and general purpose bottles.
Supplied in both clear and opaque colors, the materials are used to package
edible oils, cosmetics, shampoos, charcoal lighter fluid and bottled water.
Injection Molding -- The Company supplies compounds used in the
business machine market for computer housings and keyboards. It also
supplies compounds to produce electrical outlet boxes. These proprietary
compounds, with extensive approval procedures by customers or regulatory
bodies, are sold to some of the leading international producers of
injection molded products. The Company also manufactures compounds for use
in pipe and furniture fittings.
Profile Extrusion -- The Company supplies profile extrusion markets,
which have applications in window and furniture profiles and extruded
sheets for household fixtures and decorative overlays. Profile extrusions
are an end-product for both pelletized and powder compounds.
AROMATIC CHEMICAL PRODUCTS
Cumene. Cumene is produced at the Company's Pasadena, Texas, facility
located on the Houston ship channel. The Company's cumene plant, the world's
largest, has an annual capacity of 1.42 billion pounds. Cumene is produced from
benzene and propylene, which are purchased from various suppliers under supply
agreements and obtained from the numerous petroleum complexes located in the
surrounding area. A large portion of the Company's cumene output is consumed
internally in the production of phenol and its co-product acetone.
Phenol/Acetone. Phenol and acetone are produced at the Company's
Plaquemine, Louisiana plant, which has approximately 440 million pounds of
annual phenol capacity and 270 million pounds of annual acetone capacity, as
well as at the Pasadena, Texas, plant where annual capacity is 160 million
pounds of phenol and 100 million pounds of acetone.
Phenol is a major ingredient in phenolic resins which are used extensively
as bonding agents and adhesives for wood products such as plywood and granulated
wood panels, as well as in insulation and electrical parts. Phenol is also a
precursor to high performance plastics used in automobiles, household
appliances, electronics and protective coating applications. Phenol also serves
as an important building block for other familiar products such as nylon
carpeting, oil additives and pharmaceuticals.
The largest use for acetone is as a key ingredient to methyl methacrylate,
which is used to produce acrylic sheeting and in surface coating resins for
automotive and architectural markets. Acetone is also an intermediate for the
production of engineering plastics and several major industrial solvents. Other
uses range from wash solvents for automotive and industrial applications to
pharmaceuticals and cosmetics.
Also as a result of the phenol/acetone manufacturing process, the Company
produces a by-product, alpha-methylstyrene ("AMS"), which is primarily used as a
polymer modifier and as a chemical intermediate.
NATURAL GAS PRODUCT
Methanol. Methanol is produced at the Company's plant at Plaquemine,
Louisiana, with an annual capacity of 160 million gallons. Natural gas
represents the majority of the cost of methanol. The Plaquemine facility is
located in the center of Louisiana's oil and gas producing region and has three
separate pipeline systems delivering gas to the plant. The natural gas is
purchased by the Company under long-term contracts at market prices from gas
pipeline companies and directly from gas producers.
A key use for methanol is in the production of methyl tertiary-butyl ether,
or MTBE, a gasoline additive that promotes cleaner burning by adding oxygen.
Methanol is also used as a raw material in the manufacture of formaldehyde,
which is an ingredient in bonding agents for building materials such as
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granulated wood panels and plywood. Other applications for methanol include
windshield washer fluid, solvents, and components of acrylic sheeting, coatings,
fibers and household adhesives.
GREAT RIVER OIL & GAS CORPORATION
The Company owns Great River Oil & Gas Corporation, a small oil and gas
exploration company, with activities centered in southern Louisiana. This
subsidiary enhances the reliability of a small portion of the natural gas
requirements at the Company's Plaquemine, Louisiana, complex.
GEORGIA-PACIFIC CONTRACT
The Company has contracts to supply, subject to certain limitations, a
substantial percentage of Georgia-Pacific's requirements for certain chemicals
at market prices. These supply contracts have various expiration dates
(depending on the product) from 1996 through 1999 and may be extended
year-to-year upon expiration. The sales to Georgia-Pacific under these supply
contracts for the years ended December 31, 1994, 1993 and 1992 amounted to
approximately 15 percent, 15 percent and 14 percent of the Company's sales,
respectively.
MARKETING
The Company markets its products primarily to industrial customers
throughout the United States. The Company's products are sold by its sales
force, which is organized by product line. The sales organization, which is
located predominantly in the eastern and midwestern United States, is supported
by the Company's technical service staff.
The Company's marketing program has been aimed at expanding and
diversifying its customer base both domestically and internationally. Other than
Georgia-Pacific, no single customer represents more than 10 percent of the
Company's net sales. Export sales accounted for approximately 13 percent, 14
percent and 15 percent of the Company's net sales for the years ended December
31, 1994, 1993 and 1992, respectively. The principal international markets
served by the Company include Canada, Mexico, Latin America, Europe and Asia.
RAW MATERIALS
The most important raw materials purchased by the Company are salt,
electricity, ethylene, benzene, propylene and natural gas. Raw materials used
for production of the Company's products are usually purchased from various
suppliers under supply contracts. Since raw materials account for a significant
portion of the Company's total production costs, the Company's ability to pass
on increases in these costs to its customers has a significant impact on
operating results which is, to a large extent, related to market conditions.
Management believes the Company has a reliable supply base of raw materials
under normal market conditions. The impact of any future raw material shortages
cannot be accurately predicted.
COMPETITION
The Company experiences competition from numerous manufacturers in all of
its product lines. In some product areas, the Company's competitors have
substantially greater financial resources and are more highly diversified than
the Company. The Company competes on a variety of factors such as price, product
quality, delivery and technical service.
Management believes that the Company is well-positioned to compete as a
result of its integrated product lines, the operational efficiency of its plants
and the location of its facilities near major water and rail transportation
terminals.
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EMPLOYEES
As of December 31, 1994, the Company had 1,146 full-time employees. The
Company also utilizes approximately 379 workers supplied by outside contractors.
The Company has one collective bargaining agreement, which covered 55 employees
at its Tiptonville, Tennessee, facility as of December 31, 1994.
DESCRIPTION OF PROPERTIES
The Company's asset base was established from 1971 to the present with
construction of the Plaquemine, Louisiana, complex; the construction of the
Pasadena, Texas, cumene plant; the purchase of the three vinyl resin and/or
compound plants; and the purchase of the Bound Brook, New Jersey, phenol/acetone
facility subsequently relocated to Pasadena, Texas, and modernized in 1990. The
Company continues to explore ways to expand both its plant capacities and
product lines. The average capacity utilization percentage of the Company's
production facilities operating in 1994 was approximately 97 percent.
The Company's manufacturing facilities are located near major water and
rail transportation terminals facilitating efficient delivery of raw materials
and prompt shipment of finished products. In addition, the Company has a fleet
of 2,405 railcars of which 753 are owned and the remainder leased pursuant to
operating leases with varying terms through the year 2010. The total lease
expense for the Company's railcars and other transportation equipment was
approximately $8,408,000 for 1994.
LEGAL PROCEEDINGS
The Company is subject to claims and legal actions that arise in the
ordinary course of its business. Management believes that the ultimate
liability, if any, with respect to these claims and legal actions, will not have
a material effect on the financial position or on the results of operations of
the Company.
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture, to be dated as of November
15, 1995 (the "Indenture"), between the Company and LaSalle National Bank, as
Trustee (the "Trustee"). The Indenture is subject to and governed by the Trust
Indenture Act of 1939, as amended. The statements under this caption relating to
the Notes and the Indenture are summaries and do not purport to be complete, and
where reference is made to particular provisions of the Indenture, such
provisions, including the definition of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference. Unless otherwise indicated, references under this
caption to sections, "sec." or articles are references to the Indenture. A copy
of the Indenture substantially in the form in which it is to be executed has
been filed with the Commission as an exhibit to the Registration Statement of
which this Prospectus is a part.
GENERAL
The Notes will be unsecured obligations of the Company, will be limited to
$100 million aggregate principal amount and will mature on November 15, 2005.
The Notes will bear interest at the rate per annum shown on the front cover of
this Prospectus from November 15, 1995 or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semiannually on
May 15 and November 15 of each year, commencing May 15, 1996, to the Person in
whose name the Note (or any predecessor Note) is registered at the close of
business on the preceding May 1 or November 1, as the case may be. Interest on
the Notes will be computed on the basis of a 360-day year of twelve 30-day
months. (sec.sec. 301, 307 and 310)
The Notes will not be redeemable prior to maturity and will not have the
benefit of any sinking fund.
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BOOK-ENTRY SYSTEM
The Notes will be issued in the form of one or more fully registered global
notes (collectively, the "Global Notes"), which will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the "Depositary")
and registered in the name of the Depositary's nominee. Except as set forth
below, the Global Notes may be transferred, in whole and not in part, only to
the Depositary or another nominee of the Depositary.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The Depositary was created to hold securities of institutions
that have accounts with the Depositary ("participants") and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The Depositary agrees with and
represents to its participants that it will administer its book-entry system in
accordance with its rules and bylaws and requirements of law.
Upon the issuance of the Global Notes, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Global Notes to the accounts of participants. The
accounts to be credited shall be designated by the Underwriters. Ownership of
beneficial interests in the Global Notes will be limited to participants or
persons that may hold interests through participants. Ownership of interests in
the Global Notes will be shown on, the transfer of those ownership interests
will be effected only through, records maintained by the Depositary (with
respect to participants' interests) and such participants (with respect to the
owners of beneficial interest in the Global Notes through such participants).
The laws of some jurisdictions may require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
laws may impair the ability to transfer beneficial interests in the Global
Notes.
So long as the Depositary, or its nominee, is the registered holder and
owner of the Global Notes, the Depositary or such nominee, as the case may be,
will be considered the sole owner and holder thereof for all purposes of such
Notes and under the Indenture. Except as set forth below, owners of beneficial
interests in the Global Notes will not be entitled to have the Notes represented
by such Global Notes registered in their names, will not receive or be entitled
to receive physical delivery of certificated Notes in definitive form and will
not be considered to be the owners or holders of any Notes under the Indenture.
Accordingly, each person owning a beneficial interest in the Global Notes must
rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder of Notes under the Indenture or
the Global Notes. The Company understands that under existing industry practice,
in the event the Company requests any action of holders of Notes or an owner of
a beneficial interest in the Global Notes desires to take any action that the
Depositary, as the holder of the Global Notes, is entitled to take, the
Depositary would authorize the participants to take such action, and that the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal of and interest on Notes represented by the Global
Notes registered in the name of or held by the Depositary or its nominee will be
made to the Depositary or its nominee, as the case may be, as the registered
owner and holder of the Global Notes.
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The Company expects that the Depositary, upon receipt of any payment of
principal or interest in respect of the Global Notes, will credit immediately
participants' accounts with payment in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Notes as shown on the
records of the Depositary. The Company also expects that payments by
participants to owners of beneficial interests in the Global Notes held through
such participants will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such participants. None of the Company, the Trustee or any agent of the Company
or the Trustee will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the Global Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between the Depositary and its participants or the
relationship between such participants and the owners of beneficial interests in
the Global Notes owning through such participants.
Unless and until they are exchanged in whole or in part for certificated
Notes in definitive form, the Global Notes may not be transferred except as a
whole by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.
The Notes represented by the Global Notes are exchangeable for certificated
Notes in definitive registered form in denominations of $1,000 and in any
greater amount that is an integral multiple thereof if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Notes or if at any time the Depositary ceases to be a clearing
agency registered under the Securities Exchange Act of 1934, as amended, (ii)
the Company in its discretion at any time determines not to have all of the
Notes represented by the Global Notes and notifies the Trustee thereof or (iii)
an Event of Default with respect to the Notes has occurred and is continuing.
Any Notes that are exchangeable pursuant to the preceding sentence are
exchangeable for certificated Notes issuable in authorized denominations and
registered in such names as the Depositary shall direct. Subject to the
foregoing, the Global Notes are not exchangeable except for a Global Note or
Global Notes of the same aggregate denominations to be registered in the name of
the Depositary or its nominee.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. All
payments of principal and interest will be made by the Company in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in the Depositary's Same-Day Funds Settlement System until maturity,
and secondary market trading in the Notes will therefore be required by the
Depositary to settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
RESTRICTIONS ON SECURED DEBT
The Company will not itself, and will not permit any Restricted Subsidiary
to, incur or guarantee any evidence of indebtedness for money borrowed ("Debt")
secured by a mortgage, pledge or lien ("Mortgage") on any Principal Property of
the Company or any Restricted Subsidiary, or on any shares of stock of or Debt
of any Restricted Subsidiary, without effectively providing that the Notes are
secured equally and ratably with (or, at the Company's option, prior to) such
secured Debt, unless the aggregate amount of all such secured Debt, together
with all Attributable Debt of the Company and its Restricted Subsidiaries with
respect to sale and leaseback transactions involving Principal Properties (with
the exception of such transactions which are excluded as described in
"Restrictions on Sales and Leasebacks" below), would not exceed 10% of
Consolidated Net Tangible Assets.
The above restriction does not apply to, and there will be excluded from
Debt in any computation under such restriction, (i) Debt secured by Mortgages on
property of, or on any shares of stock of or
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Debt of, any corporation existing at the date of original issuance of the Notes
or at the time such corporation becomes a Restricted Subsidiary, (ii) Debt
secured by Mortgages in favor of the Company or a Restricted Subsidiary, (iii)
Debt secured by Mortgages in favor of governmental bodies to secure progress or
advance payments or payments pursuant to contracts or statute, (iv) Debt secured
by Mortgages on property, shares of stock or Debt existing at the time of
acquisition thereof (including acquisition through merger or consolidation) and
Debt secured by Mortgages to finance the acquisition of property, shares of
stock or Debt or to finance construction on property which is incurred within
180 days of such acquisition or completion of construction, (v) Debt secured by
Mortgages securing industrial revenue or pollution control bonds or similar
financing, or (vi) any extension, renewal or replacement of any Debt referred to
in the foregoing clauses (i) or (iv). (Section 1007)
RESTRICTIONS ON SALES AND LEASEBACKS
Neither the Company nor any Restricted Subsidiary may enter into any sale
and leaseback transaction involving any Principal Property after the date of
original issuance of the Notes, unless the aggregate amount of all Attributable
Debt of the Company and its Restricted Subsidiaries with respect to such
transactions plus all secured Debt to which the restrictions described in
"Restrictions on Secured Debt" above apply would not exceed 10% of Consolidated
Net Tangible Assets.
This restriction does not apply to, and there shall be excluded from
Attributable Debt in any computation under such restriction, any sale and
leaseback transaction if (i) the lease is for a period of not in excess of three
years, including renewal rights, (ii) the sale or transfer of the Principal
Property is made within 180 days after the later of its acquisition or
completion of construction, (iii) the lease secures or relates to industrial
revenue or pollution control bonds or similar financing, (iv) the transaction is
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries, or (v) the Company or such Restricted Subsidiary, within 180 days
after the sale is completed, applies (A) to the retirement of the Notes, other
Funded Debt of the Company ranking on a parity with or senior to the notes, or
Funded Debt of a Restricted Subsidiary, or (B) to the purchase of other property
which will constitute a Principal Property having a value at least equal to the
value of the Principal Property leased, an amount equal to the greater of (i)
the net proceeds of the sale of the Principal Property leased, or (ii) the fair
market value of the Principal Property leased. In lieu of applying proceeds to
the retirement of Funded Debt, the Company may surrender debentures or notes
(including the Notes) to the Trustee for retirement and cancellation, or the
Company or a Restricted Subsidiary may receive credit for the principal amount
of Funded Debt voluntarily retired within 180 days after such sale. (Section
1008)
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS
The term "Subsidiary" of the Company is defined as (i) a corporation more
than 50% of the voting stock of which is owned by the Company and/or one or more
Subsidiaries of the Company or (ii) any other Person (other than a corporation)
of which the Company and/or one or more Subsidiaries of the Company has at least
a majority ownership and power to direct the policies, management and affairs
thereof.
The term "Restricted Subsidiary" is defined as a Subsidiary of the Company
substantially all the property of which is located, or substantially all of the
business of which is carried on, within the United States and which owns a
Principal Property.
"Principal Property" is defined to mean any manufacturing or processing
plant or warehouse owned by the Company or any Restricted Subsidiary which is
located within the United States and the gross book value of which (including
related land, improvements, machinery and equipment without deduction of any
depreciation reserves) on the date as of which the determination is being made
exceeds 5% of Consolidated Net Tangible Assets, other than properties or any
portion of a particular property which in the opinion of the Company's Board of
Directors are not of material importance to the Company's business or to the use
or operation of such property.
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"Attributable Debt" is defined to mean the total net amount of rent
required to be paid during the remaining primary term of certain leases,
discounted at a rate per annum equal to the interest rate on the Notes,
calculated in accordance with generally accepted financial practices.
"Consolidated Net Tangible Assets" is defined to mean the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting (i) all liabilities other than deferred income taxes, Funded Debt and
shareholders' equity, and (ii) all goodwill and other intangibles of the Company
and its consolidated Subsidiaries.
"Funded Debt" is defined to mean (i) all indebtedness for money borrowed
having a maturity of more than 12 months from the date as of which the
determination is made or having a maturity of 12 months or less but by its terms
being renewable or extendible beyond 12 months from such date at the option of
the borrower and (ii) rental obligations payable more than 12 months from such
date under leases which are capitalized in accordance with generally accepted
accounting principles (such rental obligations to be included as Funded Debt at
the amount so capitalized at the date of such computation and to be included for
the purposes of the definition of Consolidated Net Tangible Assets both as an
asset and as Funded Debt at the respective amounts so capitalized).
MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
The Company may not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer or lease or otherwise dispose of all or substantially
all of its properties and assets to any Person or group of affiliated Persons,
or permit any of its Restricted Subsidiaries to enter into any such transaction
or transactions if such transaction or transactions, in the aggregate, would
result in a sale, assignment, transfer, lease or disposal of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries on a consolidated basis to any other Person or group of affiliated
Persons, unless: (1) in a transaction in which the Company does not survive or
in which the Company sells, leases or otherwise disposes of all or substantially
all of its assets, the successor entity to the Company is organized under the
laws of the United States of America or any State thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture executed and
delivered to the Trustee in form satisfactory to the Trustee, all of the
Company's obligations under the Indenture; (2) immediately before and after
giving effect to such transaction and treating any Debt which becomes an
obligation of the Company or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Company or such Restricted Subsidiary
at the time of the transaction, no Event of Default or event that with the
passing of time or the giving of notice, or both, would constitute an Event of
Default shall have occurred and be continuing; (3) if, as a result of any such
transaction, property or assets of the Company or any Restricted Subsidiary
would become subject to a Mortgage prohibited by the provisions of the Indenture
described under "Restrictions on Secured Debt" above, the Company or the
successor entity to the Company shall have secured the Notes as required by said
covenant; and (4) certain other conditions are met. (sec. 801)
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay principal of any Note when due; (b) failure to pay any interest on any Note
when due, continued for 30 days; (c) failure to perform any other covenant or
agreement of the Company under the Indenture or the Notes continued for 60 days
after written notice to the Company by the Trustee or Holders of at least 25% in
aggregate principal amount of Outstanding Notes; (d) default under the terms of
any instrument evidencing or securing Debt by the Company or any Restricted
Subsidiary having an outstanding principal amount of $25 million individually or
in the aggregate which default results in the acceleration of the payment of
such indebtedness or constitutes the failure to pay principal payments of such
indebtedness when due, which failure is not cured for 30 days; and (e) certain
events of bankruptcy, insolvency or reorganization affecting the Company or any
Restricted Subsidiary. (sec. 501) Subject to the provisions of the Indenture
relating to the duties of the Trustee in case an Event of Default (as defined)
shall occur and be continuing, the Trustee will be under no obligation to
exercise any of its rights or powers under the
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Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (sec. 603) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Notes will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee. (sec. 512)
If an Event of Default (other than an Event of Default described in Clause
(e) above) shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Notes, with
respect to the Events of Default described in Clauses (a), (b) and (c) above, or
the Holders of at least 40% in aggregate principal amount of the Outstanding
Notes, with respect to the Event of Default described in Clause (d), may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the Indenture. If an Event of Default specified in Clause
(e) above occurs, the Outstanding Notes will ipso facto become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. (sec. 502) For information as to waiver of defaults, see
"Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default (as defined) and unless also the Holders of at least 25% in aggregate
principal amount of the Outstanding Notes with respect to the Events of Default
described in Clauses (a), (b) and (c) above, or the Holders of at least 40% in
aggregate principal amount of the Outstanding Notes, with respect to the Event
of Default described in Clause (d) above, shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. (sec. 507) However, such limitations do not apply to a suit instituted by
a Holder of a Note for enforcement of payment of the principal of or interest on
such Note on or after the respective due dates expressed in such Note.
(sec. 508)
The Company will be required to furnish to the Trustee quarterly a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance. (sec. 1019)
GOVERNING LAW
The Indenture and the Notes will be governed by the laws of the State of
New York.
DEFEASANCE
The Indenture will provide that, at the option of the Company, (A) if
applicable, the Company will be discharged from any and all obligations in
respect of the Outstanding Notes or (B) if applicable, the Company may omit to
comply with certain restrictive covenants and that such omission shall not be
deemed to be an Event of Default under the Indenture and the Notes, in either
case (A) or (B) upon irrevocable deposit with the Trustee, in trust, of money
and/or U.S. government obligations which will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent
certified public accountants to pay the principal of, and each installment of
interest, if any, on the Outstanding Notes. With respect to clause (B), the
obligations under the Indenture other than with respect to such covenants and
the Events of Default other than the Events of Default relating to such
covenants shall remain in full force and effect. Such trust may only be
established if, among other things (i) with respect to clause (A), the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling or there has been a change in law, which in the Opinion of Counsel
provides that Holders of the Notes will not recognize gain or loss for Federal
income tax purposes as a
17
<PAGE> 18
result of such deposit, defeasance and discharge and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge had not occurred;
or, with respect to clause (B), the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the Notes will not
recognize gain or loss for Federal income tax purposes as a result of such
deposit and defeasance and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and defeasance had not occurred; (ii) no Event of Default or event
that with the passing of time or the giving of notice, or both, shall constitute
an Event of Default shall have occurred or be continuing; (iii) the Company has
delivered to the Trustee an Opinion of Counsel to the effect that such deposit
shall not cause the Trustee or the trust so created to be subject to the
Investment Company Act of 1940; and (iv) certain other customary conditions
precedent are satisfied. (Article Twelve)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of, or interest on, any Note, (c) change the place or currency
of payment of principal of, or interest on, any Note, (d) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Note, (e) reduce the above-stated percentage of Outstanding Notes necessary to
modify or amend the Indenture, (f) reduce the percentage of aggregate principal
amount of Outstanding Notes necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults or (g) modify any
provisions of the Indenture relating to the modification and amendment of the
Indenture or the waiver of past defaults or covenants, except as otherwise
specified. (sec. 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
with certain restrictive provisions of the Indenture. (sec. 1010) Subject to
certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the Outstanding Notes, on behalf of
all Holders of Notes, may waive any past default under the Indenture, except a
default in the payment of principal or interest. (sec. 513)
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
(sec.sec. 601 and 605)
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in other transactions
with the Company or any Affiliate, provided, however, that if it acquires any
conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign. (sec. 608)
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<PAGE> 19
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
---------------------------------------------------------- ----------------
<S> <C>
Goldman, Sachs & Co....................................... $ 67,000,000
Chase Securities, Inc..................................... 33,000,000
----------------
Total........................................... $100,000,000
=============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of 0.50% of the principal amount of the Notes. The Underwriters may
allow, and such dealers may reallow, a concession not to exceed 0.25% of the
principal amount of the Notes to certain brokers and dealers. After the Notes
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
Under rules of the National Association of Securities Dealers, Inc.
("NASD"), Chase Securities, Inc., which is a NASD member and is participating in
the Offering as an Underwriter, may be considered an affiliate of The Chase
Manhattan Bank (National Association), which will receive in the aggregate more
than ten percent of the net proceeds of the Offering. Accordingly, the Offering
is being made in conformity with Article III, Section 44(c)(8) of the Rules of
Fair Practice of the National Association of Securities Dealers ("NASD").
VALIDITY OF NOTES
The validity of the Notes offered hereby will be passed upon for the
Company by Jones, Day, Reavis & Pogue, Atlanta, Georgia, and for the
Underwriters by Sullivan & Cromwell, New York, New York.
EXPERTS
The Company's financial statements and schedules incorporated herein and in
the Registration Statement of which this Prospectus is a part have been audited
by Arthur Andersen LLP, independent public accountants, to the extent and for
the periods indicated in their reports thereon and have been incorporated herein
in reliance upon the authority of said firm as experts in giving such reports.
19
<PAGE> 20
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Documents Incorporated by Reference... 2
The Company........................... 3
Use of Proceeds....................... 3
Selected Historical Financial
Information......................... 4
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 5
Description of Business............... 8
Description of Notes.................. 12
Underwriting.......................... 19
Validity of Notes..................... 19
Experts............................... 19
</TABLE>
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$100,000,000
GEORGIA GULF CORPORATION
7 5/8% NOTES DUE
NOVEMBER 15, 2005
------------------------
PROSPECTUS
------------------------
GOLDMAN, SACHS & CO.
CHASE SECURITIES, INC.
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