Georgia Gulf Corp. has a market cap of $426.58 million; its shares were traded at around $12.93 with a P/E ratio of 1.98 and P/S ratio of 0.21. GGC is in the portfolios of Pioneer Investments, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:The incorrect statute of limitations period caused our long-term liability for unrecognized income tax benefits to be overstated as of December 31, 2007, 2008 and 2009 by $3.1 million, $4.7 million and $12.6 million, respectively, with an overstatement of our income tax expense by $1.0 million, $1.7 million and $6.7 million, for the same periods, respectively.
The other misapplication of ASC Topic 740 that occurred upon adoption on January 1, 2007 related to uncertain tax positions in connection with our acquisition of Royal Group and resulted in a net overstatement of our long-term liability for unrecognized income tax benefits of approximately $5.0 million as of December 31, 2007, 2008 and 2009, with a corresponding understatement of goodwill by $1.2 million as of March 31, 2007 that was subsequently impaired and an understatement of our net deferred tax liabilities of approximately $6.2 million. In addition, as a result of using the incorrect statute of limitations period described above, $0.7 million and $0.8 million of uncertain tax positions should have been reversed in 2007 and 2008, respectively, which would have resulted in a corresponding decrease in goodwill of the same amounts. In the fourth quarter of 2007 and 2008, we recorded impairment charges of $159.0 million and $176.0 million, respectively, to write our assets down to their estimated fair value. Consequently, the impairment charges for the years ended December 31, 2007 and 2008 were overstated by $0.7 million and $0.8 million, respectively.
As a result of the foregoing, as of and for the year ended December 31, 2009, deferred tax assets were overstated by $0.9 million, the liability for unrecognized tax benefits was overstated by $17.6 million, deferred tax liabilities were understated by $33.0 million, accumulated deficit was understated by $16.7 million and provision for income taxes was understated by $29.7 million and net income was overstated by $29.7 million. As of and for the year ended December 31, 2008, the liability for unrecognized tax benefits was overstated by $9.0 million, deferred tax liabilities were overstated by $2.7 million, accumulated deficit was overstated by $13.0 million, accumulated other comprehensive loss, net of tax, was understated by $1.3 million, long-lived asset impairment charges were overstated by $0.8 million, the benefit for income taxes was understated by $1.7 million and net loss was overstated by $2.5 million. As of and for the year ended December 31, 2007, retained earnings were understated by $10.5 million, long-lived asset impairment charges were overstated by $0.7 million, the provision for income taxes was overstated by $9.8 million and net loss was overstated by $10.5 million.
On March 31, 2009, we commenced private exchange offers for our outstanding 7.125 percent senior notes due 2013 (the "2013 notes"), 9.5 percent senior notes due 2014 (the "2014 notes"), and 10.75 percent senior subordinated notes due 2016 (the "2016 notes" and collectively with the 2013 notes and 2014 notes, the "notes") and, in conjunction with the private exchange offers, withheld payment of $34.5 million of interest due April 15, 2009 for the 2014 and 2016 notes. After numerous extensions and amendments of the exchange offers and additional waivers and amendments under our senior secured credit facility, on July 29, 2009, we consummated our private exchange of equity for approximately $736.0 million (principal amount), or 92.0 percent, in aggregate principal amount of the notes. The $736.0 million was comprised of $91.0 million of the $100 million of 2013 notes, $486.8 million of the $500 million of 2014 notes, and $158.1 million of the $200 million of 2016 notes. An aggregate of approximately 30.2 million shares of convertible preferred stock and approximately 1.3 million shares of common stock were issued in exchange for the tendered notes after giving effect to a 1-for-25 reverse stock split, which reduced the outstanding common shares, before the issuance of common shares in the debt exchange, to approximately 1.4 million shares. In preparation and prior to this debt for equity exchange, we executed a 1-for-25 reverse stock split. In September 2009, following an amendment of our charter to increase our authorized shares of common stock to 100 million shares, approximately 30.2 million convertible preferred shares converted to an equal number of common shares. After giving effect to the debt exchange at December 31, 2009, we had outstanding $9.0 million of the 2013 notes, $13.2 million of the 2014 notes and $41.4 million of the 2016 notes. This debt for equity exchange was a troubled debt restructuring and thus an extinguishment of the notes for which we recognized a net gain of $400.8 million, or approximately $15.24 per share.
On December 22, 2009, we refinanced our senior secured credit facility and our $175.0 million asset securitization agreement. At the time of the refinancing, our senior secured credit facility was comprised of a $300.0 million revolving credit facility and a $347.7 million Term Loan B. We replaced the senior secured credit facility and asset securitization facility with a four-year term secured assetbased revolving credit facility that provides for a maximum of $300 million of revolving credit (including credit in the form of letters of credit and swingline loans) through December 2013, subject to borrowing base availability and other terms and conditions (the "ABL Revolver") and the issuance of $500.0 million in principal amount of our 9.0 percent senior secured notes. The borrowing base under the ABL Revolver is equal to specified percentages of our eligible accounts receivable and inventories, less a fixed $15 million availability reserve and other reserves reasonably determined by the co-collateral agents. The borrowings under the ABL Revolver are secured by substantially all of our assets.
Our new capital structure significantly reduces our interest expense to approximately $70 million to $80 million annually from approximately $130 million in recent years and substantially eliminates quarterly maintenance covenants that were part of our debt agreements under our previous capital structure. However, we cannot be certain that our annual interest expense will always fall within a range of $70 million to $80 million, as the borrowings under our ABL Revolver are subject to variable interest rates, and thus, could increase substantially over time.
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