S&P rates Omnova loan B+, notes B-

Standard & Poor's said it affirmed its B corporate credit rating on Omnova Solutions Inc. and assigned a B+ issue-level rating and a 2 recovery rating to the company's proposed $200 million term loan B facility maturing June 2017. The 2 rating indicates a 70% to 90% expected recovery in a default.

The agency also said it assigned a B- rating and 5 recovery rating to the company's proposed $250 million senior unsecured notes due December 2018. The 5 rating indicates a 10% to 30% recovery in the event of a payment default. The company also plans to obtain a $100 million asset-based revolving credit facility, which it will not rate.

The outlook was revised to positive from stable.

The company intends to fund the Eliokem International SAS acquisition through the term loan and notes and about $28 million in balance sheet cash, S&P said.

The outlook revision reflects the benefits of the Eliokem acquisition, including an improvement in the business risk profile through an increase in geographic diversity, better overall profitability through a greater contribution from higher margin products and an increased presence in high growth developing regions, S&P said.

The agency also said it expects these favorable factors to more than offset the deterioration of its financial risk profile resulting from the proposed debt-financed acquisition.

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