Fitch affirms Omnova

Fitch Ratings said it affirmed Omnova Solutions Inc.'s B+ issuer default rating, BB+/RR1 senior secured credit facility and B+/RR4 senior secured notes.

The outlook is stable.

The agency said Omnova's ratings reflect its small size, relatively high debt level and weak, though improving, operating performance. The company's size has declined and its product portfolio has become more limited upon the divestiture of its roofing business in late September for about $40 million cash. Fitch said the opportunistic sale monetized a small contributor to sales and operating income while removing warranty liabilities from the balance sheet. However, the agency noted that resulting lower revenue and earnings levels make Omnova more susceptible to default risk when business conditions weaken.

The total debt-to-operating EBITDA ratio remains high at 3.6x, with the company's $165 million 11¼% notes representing the majority of the outstanding debt. The agency said these notes may be refinanced in 2007 after their call date at June 1 as the company tries to reduce future interest expense.

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