Omnova boasts ‘ample’ liquidity of $222 million, considers options for callable notes

By Lisa Kerner

Charlotte, N.C., Aug. 12 – Omnova Solutions Inc. reported debt of $451 million at May 31 composed of a term loan B and senior notes, plus ample liquidity and “no real issues from a leverage standpoint,” said chairman and chief executive officer Kevin McMullen.

The $193 million term loan B matures in 2018 and is at Libor plus 300 basis points and a floor of 1.25%.

Omnova’s $250 million of 7 7/8% senior notes also mature in 2018. The notes are callable in November of this year.

“So with the liquidity we have, that’s clearly one of the things we are looking hard at,” said McMullen of the notes.

He made his comments on Tuesday at the Jefferies Global Industrials Conference in New York.

The company had cash of $134 million, total liquidity of $222 million and $88 million of borrowing capacity under its $91 million revolver at the end of May, according to the presentation.

“Our focus is to generate double-digit operating profit, which would translate into about 13% to 14% EBITDA margins, and to reduce our leverage overtime to about two times, but balancing that with opportunities that we can identify for strategic growth investments,” McMullen said.

Omnova would be willing to “leverage up for the right opportunity,” he added.

Based in Fairlawn, Ohio, Omnova provides emulsion polymers, specialty chemicals, and decorative and functional surfaces for commercial, industrial and residential end uses.

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