Omnova gets tenders for 98.182% of 11¼% notes

By Angela McDaniels

Seattle, May 22 - Omnova Solutions Inc. said it received tenders and consents for $162 million, or 98.182%, of its $165 million 11¼% senior secured notes due 2010 during a tender offer that expired at 8 a.m. ET on May 22.

The amount of notes tendered was unchanged from May 17, when the company announced it had received enough tenders and consents to execute the supplemental indenture to effect the amendments eliminating substantially all of the restrictive covenants in the indenture.

All of the tendered notes were accepted for purchase, and the supplemental indenture is now operative.

"This is a very positive step forward for Omova Solutions and reflective of the significant operating improvements we have made across the company," chairman and chief executive officer Kevin McMullen said in a company news release.

"The refinancing of the notes will provide interest expense savings of approximately 350 basis points or nearly $6 million per annum based on today's debt level and interest rates. In addition to the significantly reduced interest expense, we have extended our debt maturities and increased the company's financial flexibility."

The tender offer and consent solicitation began on April 20. The consent deadline was May 3.

For each $1,000 principal amount of notes tendered, Omnova will pay $1,058.10, which includes a consent fee of $30.00 for notes tendered by the consent deadline.

Tendering noteholders will also receive accrued interest up to but excluding the payment date.

The tender consideration was determined on May 4 and equals the present value of $1,056.25 - the redemption price for the notes on June 1, 2007, which is the earliest redemption date - plus interest payments through June 1, discounted using the 3½% Treasury note due May 31, 2007 plus a fixed spread of 50 bps, less accrued interest up to but excluding the payment date.

The company plans to pay the tender consideration before June 1. If the payment date occurs on or after June 1, Omnova said it will pay $1,060.94, which represents the redemption price on June 1, plus the equivalent of two weeks of interest.

The company said it is refinancing the notes with a new $150 million seven-year term loan B and an amended and extended five-year $80 million asset-based loan.

On May 18, Omnova extended the tender offer to May 22 from May 18 to coordinate the closing with the completion of the new loans.

Deutsche Bank Securities Inc. (call collect 212 250-5655) was the dealer manager. The information agent was MacKenzie Partners, Inc. (800 322-2885).

The Fairlawn, Ohio, specialty chemical company announced plans for the redemption on March 20.

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