Moody's rates Omnova loan B2

Moody's Investors Service said it assigned a B2 (LGD3, 48%) rating to Omnova Solutions Inc.'s proposed $150 million guaranteed senior secured term loan due 2014 and affirmed the company's B2 corporate family and probability-of-default ratings and B3 (LGD4, 64%) $165 million 11¼% senior secured global notes due 2010.

The outlook remains positive.

The term loan proceeds will be used to partially fund the company's tender offer for its 11¼% notes.

The agency said the ratings reflect the diversity of the company's end-markets and customer base, leading market shares within its niche markets, improving financial performance over the last two years and a decrease in leverage following the debt reduction that accompanied the divestiture of the GenFlex Building Products business. The proposed refinancing will further strengthen Omnova's credit metrics by reducing interest expense.

Nevertheless, the company's cash flow has been and is expected to remain modest in 2007, its product line is largely commodity-like and the company is exposed to volatile raw materials and to the U.S. housing market, Moody's said.

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