Omnova to raise $425 million debt, upsize loan with Eliokem purchase

By Sara Rosenberg

New York, Sept. 22 - Omnova Solutions Inc. plans on raising $425 million in new long-term debt and increasing the size of its asset-based credit facility to $100 million in connection with the proposed acquisition of Eliokem International, according to a news release.

In addition, the company intends to extend the maturity of the asset-based facility.

Assuming a definitive agreement is reached, Omnova will be buying Eliokem, a producer of specialty polymers and chemicals, from AXA Private Equity for €227.5 million, or about $300 million at current exchange rates.

Currently, the company has entered into an agreement with AXA granting a period of exclusivity for the acquisition.

Proceeds from the new long-term debt will be used to fund the acquisition and repay all of Omnova's and Eliokem's existing debt.

At close, the company expected to have $40 million of cash, and the transaction is anticipated to be neutral to slightly dilutive to earnings in 2011, but accretive in 2012.

Closing of the transaction is expected by year-end, subject to consultation with Eliokem's Works Council in France, regulatory approvals, financing and other customary conditions.

Omnova is a Fairlawn, Ohio-based provider of emulsion polymers, specialty chemicals, and decorative and functional surfaces for various commercial, industrial and residential end uses.

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