Fitch Assigns 'BB+' to Georgia Gulf's Proposed Credit Facility.

CHICAGO -- Fitch Ratings has assigned a 'BB+' rating to Georgia Gulf Corporation's proposed $1.05 billion senior secured credit facility. The issuer default rating (IDR) and the senior unsecured notes rating would be 'BB-' upon the closing of Georgia Gulf's acquisition of Royal Group Technologies and the Rating Outlook would be Negative. Georgia Gulf's current credit ratings remain on Rating Watch Negative.

An IDR of 'BB-' incorporates the benefit of greater integration in the vinyls chain; the potential for greater earnings and cash flow with less volatility; and some success in realizing cost synergies. However, the rating is tempered by concerns regarding high leverage, particularly as the PVC resin market is expected to loosen and residential construction activity may be slowing. Moreover, target integration risk may be higher due to ongoing legal and regulatory investigations at Royal Group, and Georgia Gulf's lack of direct experience integrating a sizeable downstream target.

The proposed senior secured credit facility rating of 'BB+', two notches higher than the proposed IDR of 'BB-', reflects the superior collateral position of the term loan and revolver based on preliminary terms and conditions. The rating also considers the high likelihood of principal recovery in a liquidation scenario. The rating could change if the final terms of the new credit agreement differ materially from the preliminary terms and conditions considered for the rating.

Based in Atlanta, Georgia Gulf is a commodity chemicals producer. It's product portfolio includes VCM, PVC resin, vinyl compounds, cumene, acetone, and phenol. Georgia Gulf earned approximately $274 million of EBITDA on sales of $2.2 billion for the LTM period ended June 30, 2006.

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