DUFF & PHELPS RATES GEORGIA-PACIFIC CORPORATION'S $250 MILLION 30-YEAR DEBENTURES 'BBB-'
CHICAGO, Feb. 26 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of BBB-' (Triple-B Minus) to Georgia-Pacific Corporation's $250 million 8.25 percent debentures due March 1, 2023. This rating is identical to the present rating of Georgia-Pacific's senior unsecured debt. Proceeds will be used for general corporate purposes. The rating reflects the excellent cash flow generating ability of Georgia-Pacific's core assets, balanced against the company's penchant for financial leverage to effect acquisitions and share repurchases. Since peaking at approximately $8.0 billion following the 1990 merger with Great Northern Nekoosa, fixed obligations have been reduced to $6.5 billion or 71 percent of total capital at Sept. 30, 1992. However, the company remains highly financially leveraged, and further debt reduction is uncertain as cash may be applied toward share repurchases and/or acquisitions. Georgia-Pacific's business strategy emphasizes the operation of large-scale, highly efficient mills. The company's low variable cost position helps mitigate industry-wide pricing pressures arising from current economic conditions and excess capacity in many pulp and paper grades. The favorable cost position is also derived from its timber resource base, located in the southeastern United States, which offers a relatively low-cost and abundant fiber source. Nonetheless, the business segments are highly cyclical; with wood products demand dependent on new construction activity, and the pulp and paper segments dependent upon general business conditions and capacity growth. -0- 2/26/93 /CONTACT: Doris S. Nakamura of Duff & Phelps Credit Rating Co., 312-368-3130/ (GP)
CO: Georgia-Pacific Corporation ST: Georgia IN: PAP SU: RTG
CK -- NY027 -- 0822 02/26/93 11:43 EST
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|Date:||Feb 26, 1993|
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