Omnova to reduce debt, maintain liquidity in case of global downturn

By Aleesia Forni

Columbus, Ohio, Sept. 28 - Omnova Solutions Inc.'s first priority with its use of cash in the future is to pay down part of its $196.7 million term loan maturing in 2017, according to chief financial officer Michael E. Hicks.

"But we're also cognoscente of liquidity and making sure that we have ample liquidity to run the business in case there is a global downturn," Hicks said during the company's third-quarter 2011 earnings conference call.

"We were caught with perhaps too low liquidity in 2008, and we want to make sure that doesn't happen again."

As of Aug. 31, the company reported cash and cash equivalents of $95.1 million, compared to $79.5 million as of May 31.

Along with the company's term loan, Omnova's total debt is comprised of $250 million of 7 7/8% senior notes maturing in 2018 and $10.5 million of foreign operations borrowings.

The company had no outstanding borrowings under its $97.7 million revolving credit facility as of Aug. 31.

Omnova reported net sales of $331.1 million for its third quarter, an increase from $227.9 million during the same quarter of 2010.

"We have shown our ability to be a strong cash generator, even in the most difficult environments," chief executive officer Kevin McMullen said during the call.

Omnova is a Fairlawn, Ohio-based provider of specialty chemicals, emulsion polymers and decorative surfaces.

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