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Moody's ups Omnova view to positive
Moody's Investors Service said it revised Omnova Solutions Inc.'s outlook to positive from stable and affirmed its B2 corporate family rating and B3 $165 million 11¼% senior secured notes due 2010 (LGD4, 64%) following the recent sale of the firm's building products business.
The change to positive reflects Moody's expectation that the firm will continue to improve its credit metrics, achieve top line growth and benefit from moderating prices for its key raw materials and improving EBITDA margins. With the divestiture of its buildings products business, the firm will be able to concentrate on growth opportunities for its remaining two businesses, which enjoy strong market positions in their niche markets.
The agency said the outlook and ratings reflect Omnova's debt reduction over the past three years, the better financial profile of the remaining businesses and improvement in credit metrics in 2005 and 2006. Prior to the assets sale, Omnova had been successful in reducing long-term debt by $27 million over the past three years, and after repayment of revolving credit facility borrowings with the building products divestiture proceeds, Omnova should have improved liquidity with no outstanding borrowings under the facility other than letters of credit.
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