Moody's drops Omnova outlook to negative

Moody's Investors Service said it moved the outlook for Omnova Solutions Inc. to negative from stable and affirmed its corporate family rating and other ratings.

The change in outlook reflects the continued pressure on operating margins and expectations for weak end markets over the next 12 months, the agency said.

Affirmed ratings include the company's corporate family rating at B2, probability of default rating at B2 and $150 million guaranteed senior secured term loan B due 2014 to B2 (LGD4, 50%) from B2 (LGD4, 52%).

Omnova's margins and free cash flow have declined over the past two years, primarily due to rising raw material, energy and transportation costs that the company has not been able to fully pass through to its customers on a timely basis as a result of weak end markets, the agency said.

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